US Federal Reserve Chairman Powell Hints⁢ at Interest⁣ Rate‍ Cut in⁤ July

US Federal ‌Reserve Chairman Powell⁤ stated⁤ in‌ a press conference that if employment ​data were ⁢available, interest ​rates would probably be cut in July. ⁣Powell⁤ believes that interest rates ‌will​ not return to the period of ​extremely low ​interest rates, citing that “instinctively, most ⁤people would say ⁢we probably won’t‍ go back to ​that era where trillions of dollars of sovereign debt were trading‍ at negative interest rates and long-term⁢ bonds were trading at negative interest ‌rates.”

Key Takeaways from Powell’s Speech

No Return to Extremely Low Interest Rates

Powell emphasized ⁣that interest rates will be higher than⁤ they were during the period of extremely low interest⁢ rates.‍ However, he did not specify how high interest rates would⁤ be.

No ‌Signs of Recession

Powell stated that there ⁣are no signs of‍ recession, citing that the economy​ is “generally⁣ strong” and‍ that the labor market ​is “still⁢ at a very stable level.” He also⁤ mentioned that inflation is falling, and the labor ⁣market is not‍ the source of ‍inflationary pressure.

Interest Rate Cut in July

Powell hinted that if employment data were ‍available, interest rates ​would probably⁢ be cut in July.⁣ He also mentioned that the aim⁣ is to keep⁢ inflation ⁢stable while ensuring‍ the unemployment​ rate does not rise higher.

Full⁢ Text​ of Powell’s Speech

02:31:50 – Fed Chair⁤ Powell: ‌The economy is generally‍ strong and committed to maintaining economic strength

02:33:23‍ – Powell: ⁣Our decision today reflects growing confidence that ‍the‌ strength of the⁢ labor market can be maintained

02:34:23 – Powell: Our forecast​ shows that ⁣we expect GDP growth to remain robust

02:36:14 – Powell: The ‍labor ⁤market continues to cool, indicators⁣ show ‌that‌ tensions ‍are less⁣ severe than before the epidemic, and the labor ⁤market is not‍ the source⁤ of inflationary pressure

02:36:32 – Powell: Inflation has eased significantly but remains above⁤ our⁢ target

02:37:28 – Powell: Long-term inflation expectations appear firmly under control

02:38:16 – Powell: Upside ‌risks ⁣to inflation have⁢ weakened, downside ‍risks​ to the labor⁢ market have ‍increased

02:39:18 – Powell: Given‌ risks, we will cut interest rates by 50 basis points today This adjustment will ⁢help maintain the ⁤strength of the economy‌ and the labor market

02:39:43‌ – Powell: We are not following ⁢any default path, we will ⁣discuss decisions on a⁢ meeting ‌by meeting basis

02:40:27 – ‌Powell: Our forecast is not a plan⁢ or a decision, we will adjust policy as ‌needed

02:41:21 – Powell: We can slow the⁣ pace of rate cuts if the ⁣economy remains robust; in the same⁤ way, we can respond if ‍the ⁤labor market deteriorates

02:42:39 – Powell: We ⁤are ⁤reshaping our policy stance

02:42:58 – Powell: Nothing in our forecast suggests we ‌are rushing to action

02:43:32 ⁣- Powell: Feeder​ forecasts are base scenario ⁤forecasts, what we do ⁤really depends on how the ⁣economy develops

02:44:05‌ -⁣ Powell: We can speed up or slow down or delay rate cuts if appropriate

02:46:05 – Powell: There is broad‌ support for ⁣today’s decision ⁤to cut interest⁣ rates by 50 basis ⁣points, there are differences of opinion and diversity of opinion, but there is ‌also a lot of consensus

02:47:36 – Powell: We have had a ⁤good start today on rate cuts, the committee ⁤does not feel‌ that‍ it is being rushed

02:48:49 – Powell: We ⁤don’t think we’re behind​ the curve,⁤ we think ⁣we’re operating⁤ in ​a timely manner

02:49:29 – Powell: But it is ​a ⁣sign‍ of our commitment not to fall behind

02:50:04 – Powell: We ⁤are ​very patient about lowering policy rates, other⁣ countries have ⁣already cut rates

02:51:23 -⁢ Asked about the ‌balance sheet, Powell said reserves are stable and adequate and expected to remain so for some time

02:52:32 – Powell: We have no plans to stop shrinking our ​balance sheet in the near⁤ future

02:53:40 -‌ Powell: Our policies remain restrictive

02:55:25 – Powell: We don’t think ⁣the labor market needs to ease further for inflation to drop to⁣ 2%

03:00:54 – Powell: I think the‍ neutral rate ⁤is probably‍ much higher than it ⁢was before the pandemic

03:02:19 – When asked about the election, Powell says that our decisions have never been ⁤about politics or anything else, our job is to support⁢ the economy

03:03:27 ‌- Powell: We are not declaring victory on inflation

03:09:15 – ‌Powell: ​If jobs ​data had been available, we probably would have cut rates in July

03:09:48 – Powell: Everyone⁢ on the committee agrees that it is time to act