Federal Reserve Chairman Jerome Powell said today at a conference held by the National Association for Business Economics that despite a gradual slowdown in inflation, the US labor market remains robust. He also suggested that there may not be a significant rate cut this month at the Federal Reserve’s upcoming two meetings.
Powell stated during the Q&A session, “This is not a committee that is in a hurry to cut rates. We are going to be guided by the data that does come in.”
The US central bank began its long-awaited easing policy earlier this month, marking the first rate cut in four years. After keeping rates at a 20-year high for over a year, the 50 basis point cut is seen as a significant move.
Powell mentioned that if the economy performs as expected, there could be two more rate cuts this year and added, “The federal funds rate will be lowered by 50 basis points before the end of the year.”
Meanwhile, according to FedWatch data, traders’ expectations for a 25 basis point rate cut in October by the Federal Reserve have further strengthened, increasing from 46% the previous day to 65%. At the same time, market participants expect the target range for interest rates to be 4.00%-4.25% after the December meeting, a decrease of 75 basis points from the current level.
The Federal Reserve has been striving to provide conditions for a “soft landing” for the economy, where inflation decreases without a significant rise in unemployment. Despite the increasing confidence of the Fed, Powell stated that the central bank is still prepared to adjust policies based on data, saying, “If the economy weakens more than expected, we can move more quickly; if the economy weakens less than expected, we can slow down the pace of rate cuts. We will adjust our actions as needed.”
Although Powell’s signal of continued rate cuts had no positive effect on Bitcoin, the cryptocurrency briefly fell below $63,000 this morning and has since rebounded above that level.
