Federal Reserve Chairman Jerome Powell said on Wednesday that the economy is stronger than it was in September Central bank started cutting interest ratespotentially allowing policy makers more alert In reducing the rates further.
“As we try to find neutral, we can be a little more cautious,” Powell said at a New York Times event.
His remarks to Fed officials will likely be his last quiet period before the Dec. 17-18 meeting, which begins on Saturday. Before his appearance, investors were leaning toward an expectation Third consecutive cut in interest rate When the Central Bank meets in two weeks.
Comments from some of Powell’s key aides this week pointed in that direction, with Gov. Christopher Waller saying Monday he was “leaning” toward a cut at the upcoming meeting, while others declined to pre-commit to that outcome. Was doing.
Powell’s comments Wednesday seemed to align him with that more cautious group of policymakers and largely echoed his last public appearance in mid-November, when he said the Fed was “cautiously” considering its rate cuts. Can deliberate and does not need to rush.
Since then the inflation and jobs data, and especially Waller’s comments, have substantially raised market expectations of another quarter-point cut in the benchmark rate to a range of 4.25% to 4.50%. Powell’s comments Wednesday did not change that.
The Fed chair has stressed the need for the central bank to keep its options open at a time of growing uncertainty about the shape of macroeconomic policy in the coming year, with some worrying that its progress on inflation has stalled, and There is evidence that the feared job market downturn has been avoided.
Earlier on Wednesday, two other Fed officials – the heads of regional banks in Richmond and St. Louis – took an all-options-open approach.
“I’m keeping all my options open,” St. Louis Fed President Alberto Musallem said at the Bloomberg Monetary Policy Conference. He also said he would look at incoming data before deciding whether rates need to be brought down again in two weeks.
Richmond Fed President Thomas Barkin told CNBC CFO Council that he believes both inflation and employment are headed in the right direction, but with more data coming in before the meeting, he would not make any predictions about the outcome. Will put it.
A key measure of inflationThe personal consumption expenditure price index, excluding food and energy costs, has moved sideways in a range of 2.6% to 2.8% since May, well above the central bank’s 2% target.
While Fed officials regularly say they think price pressures are still going to ease, especially as housing costs are slowing in real time, but so far as government data has yet to come, they are keeping rates under control. And would also like proof of this before making the cut.
Ahead of Powell’s appearance, a major business survey showed there is some cooling in the vast US services sector and businesses are worried about the prospect of a new round of tariffs on imports from the incoming Trump administration early next year, leading to They are worried that prices may go higher in future.
At the same time, auto sales in November were the highest in more than three years, which shows that consumption remains healthy.
It’s a constant mix of hot and cold data that keeps Fed officials cautious and reluctant to give much in the way of concrete forward guidance.
Waller, for one, touted his “inclination” toward a rate cut this month with the caveat that data before the meeting could change his position. In addition to this Friday’s employment report, consumer and wholesale inflation and retail sales readings for November will come next week, the day the Fed meeting begins.
