After the Fed’s announcement of a 50 basis point interest rate cut, which surprised Wall Street banks, Fed Chairman Jerome Powell held a press conference and answered questions.
The majority of Wall Street banks had forecast a 25 basis point cut in the interest rate decision.
- Here are the most important sections from Jerome Powell’s statements:
- We focus entirely on our goals.
- The overall economy is strong and we are committed to maintaining strong economic growth.
- The economy is generally strong.
- Our decision today reflects growing confidence that labor market strength can be maintained.
- The labor market has begun to cool from its previously overheated state. We expect GDP growth to remain strong, according to our forecasts.
- The Fed can protect the workforce’s strength with policy adjustments.
- Consumer spending remains resilient.
- The labor market is not the source of high inflationary pressures.
- Although inflation has declined significantly, it continues to remain above our target.
- Longer-term inflation expectations appear well anchored.
- We have not set any fixed interest rate path and will decide at each meeting.
- Taking the balance of risks into account, we reduced interest rates by 50 basis points today.
- Restrictive monetary policy will help restore the balance between supply and demand.
- Policy adjustments can be made more slowly if the economy remains robust and inflation remains stubborn.
The Fed has cut interest rates for the first time since the start of the pandemic, lowering borrowing costs by half a percentage point in a move that should provide relief to households and businesses weighed down by higher interest rates. The more aggressive approach suggests authorities are proactively trying to ease pressure on the economy and prevent the labor market from slowing further. The benchmark interest rate is currently hovering between 4.75% and 5%.
The Fed’s September meeting is one of the most eagerly awaited of the year. Inflation has been easing toward normal levels, and Fed leaders expect that to continue, but they are also under pressure to make sure that higher interest rates don’t slow the labor market any further than it already is.
Fed Chair Jerome H. Powell will hold a press conference and announce his diagnosis of the economy.
*This is not investment advice.
