US Federal Reserve Chairman Jerome Powell said interest rates will fall further, but probably not by much in the next few months.
In a speech at an event in Dallas (USA) on November 14, Powell commented that current trends and dynamics of the economy are not expected to change, at least in the near term. That is, the job market is slowing and inflation is cooling, thanks in part to high interest rates. Maintaining lending rates at current levels could cause unemployment to increase.
"We are changing policy gradually. The economy is not sending any signals that the Fed needs to rush to lower interest rates," Powell affirmed.
Last month, the US consumer price index (CPI) rose 2.6% compared to the same month last year. This was higher than the previous month. However, US officials did not see any obvious upward pressure on prices in the economy. Mr. Powell also said that inflation was still on track to reach the 2% target.
Markets have recently been concerned that President-elect Donald Trump’s proposed policies could cause major fluctuations in the US economy, changing the Fed’s interest rate orientation. However, most economists believe that even if passed, Trump’s policies will take some time to impact the economy.
Trump has proposed extending all tax cuts that are set to expire early next year, capping credit card interest rates at 10%, further reducing income taxes on individuals and imposing import tariffs on all goods entering the U.S. This plan could be passed more quickly with Republicans in control of both the Senate and the House of Representatives.
Powell said that early next month, Fed economists will assess Mr Trump’s plans and their impact on the economy. He stressed that many things remain uncertain, such as the possibility of retaliation from trading partners if the US imposes import tariffs.
"I'm not going to make a judgment until it's clear. I don't want to predict," Powell said.
Powell's term as Fed chairman ends in May 2026, but he remains a member of the Fed Board of Governors until January 2028. When asked if he would stay on the Fed after his term ends, Powell only confirmed that he would complete his term as chairman.
