Kenny Porcari, chief market strategist at Slate Stone Wealth, talks about Fed Chair Jerome Powell's job and what steps President Trump will take to expand Bernie & Company's economy.
Federal Reserve Chairman Jerome Powell He said Thursday that central bank policymakers are in no hurry to cut interest rates to the so-called “neutral rate” and are comfortable adjusting them to bring inflation up to target.
“We are moving policy over time to a more neutral setting, but the path to get there is not set in advance,” Powell said in his opening remarks at an event at the Dallas Regional Chamber. “We are currently considering additional adjustments to the federal government's target range.” Regarding fund interest rates, we will carefully evaluate the balance of available data, future outlook, and risks. ”
“The economy is not sending a signal that we need to rush into cutting rates. The strength of the economy we're seeing right now allows us to approach this decision with care,” Powell said. “Ultimately, the path of policy rates will depend on future data and how the economic outlook develops.”
In a Q&A with Washington Post columnist Katherine Rampel, Powell said: federal reserve system We know when neutral interest rates will be reached, and his past comments state that “we know it by its workings.”
Fed cuts interest rates by quarter points
Fed Chairman Jerome Powell said the Fed is in no hurry to reach neutral interest rates and is in a position to adjust as new economic data is released. (Shelby Tauber/Bloomberg via Getty Images/Getty Images)
Chairman Powell said that when the Fed raises or lowers the benchmark federal funds rate, it “must have an estimate of the level of interest rates that is neutral in some sense, neither pushing up and supporting the economy nor pushing it down.” It must be done,” he explained. There will be stricter and more restrictive policies. ”
“We are fully aware that there is no theoretical or empirical way to derive a sufficiently reliable estimate of the neutral interest rate,” he said. “So what does it say? It's that we need to tread carefully.”
He went on to say that the Fed considers its current policy to be restrictive, although it cannot say exactly how restrictive, because “the economy was overheated, and now has cooled down almost as we expected.” The labor market gradually cools, inflation falls significantly, labor market It's not completely stable, but it's in a good position. ”
Fed's Powell remains unchanged even if President Trump thinks otherwise
“We have started to cut rates and have begun the process of lowering them towards a neutral level, and I think the right way to find that level is to be cautious and patient,” he explained. “We don't want to act too hastily. We may need to act quickly because if the labor market starts to deteriorate in a serious way, we want to act before that happens. But , we don’t see it that way.”
“In this situation, what we need to do is be careful and act cautiously, and we are getting to a range that is close to a plausible range of neutrality, but maybe slowing us down.” We’re just doing it to increase our chances of getting this right,” he said.
“We are moving between…the risk of moving too fast and the risk of moving too slow. We want to aim for the middle ground and get it right. So we… It's providing support to the labor market, and it's also helping to enable the labor market to see inflation go down,'' Powell explained. “So if the data allows us to go a little slower, it seems like a smart move to go a little slower.”
Inflation rose 2.6% in October, as expected
The Fed raises interest rates to the highest level since 2001 (ranging from 5.25% to 5.5%) in response to the hottest inflation in 40 years following pandemic-related supply chain disruptions and significant levels of inflation. Ta. Inflation peaked at 9.1% in June 2022. federal spending The aim is to reduce the impact of the new coronavirus.
In its last two meetings, the Fed cut the federal funds rate by 50 basis points in September, followed by a 25 basis point cut last week, leaving the rate unchanged at 4.5% to 4.75%. Inflation measures have eased closer to the Fed's 2% target, with the consumer price index (CPI) in October reaching the Fed's desired 2.6%. Personal consumption expenditure (PCE) index In September, the most recent reading, it was 2.1%.
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Powell was asked if he intended to continue serving on the Fed's board beyond his term as chairman, which expires in May 2026. Powell's term as Fed chairman expires in January 2028.
“All I want to say is that I definitely intend to serve until the end of my term as chairman, and that's all I've decided to do and how I feel about it. We're very focused on getting the job done for the American people. That's all we can focus on,” Powell said.
