Federal Reserve (Fed) Chairman Jerome Powell recently stated that the Fed does not need to rush in lowering interest rates, given the robust growth of the U.S. economy. According to Powell, the economy's current signals indicate a solid foundation, which does not necessitate immediate action from the Fed. “The economy is not giving any signs that we need to quickly lower interest rates,” he remarked in a recent press conference.
Powell noted that low unemployment rates, strong consumer spending, and rising business investment create a favorable environment for the central bank to maintain a cautious stance. Recent data shows that inflation is trending downward, though it has yet to reach the Fed's 2% target. Powell expressed confidence that inflation will gradually come under control, allowing the Fed to consider further gradual rate cuts as inflation approaches its goal.
He also emphasized that the Fed is closely monitoring developments in the labor market, which saw slight impacts in October due to factors like storms and labor strikes. Despite these events, unemployment remains low by historical standards, demonstrating the resilience of the U.S. economy.
In fact, Powell highlighted that the Fed's current monetary policy is being adjusted toward a "neutral level" – one that maintains economic stability without hindering growth. Although there are expectations for a further rate cut in December, Powell remains cautious about making specific predictions for 2025, emphasizing that the Fed will stay flexible and responsive to real-time economic conditions.
Powell's remarks have reinforced confidence in the U.S. labor market and economy, indicating that the Fed is ready to respond to any potential global economic shifts.