Powell: No Rush On Interest Rate Cuts

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Post on Nov 15, 2024

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Powell: No Rush on Interest Rate Cuts, Focus Remains on Fighting Inflation

Washington, D.C. - Federal Reserve Chair Jerome Powell reiterated the central bank's commitment to tackling inflation, signaling that interest rate cuts are not on the immediate horizon. In a speech at the Economic Club of Washington, Powell emphasized that the Fed will remain focused on bringing inflation back down to its 2% target, even if this means continuing to raise interest rates.

"We will stay the course until the job is done," Powell stated, underscoring the Fed's determination to achieve price stability. "While recent data suggest that inflation is moderating, it remains at elevated levels, and we are not yet in a position to declare victory."

Powell acknowledged the recent decline in inflation, with the Consumer Price Index (CPI) falling to 3% in June. However, he cautioned against reading too much into this single data point, emphasizing that core inflation, which excludes volatile food and energy prices, remains stubbornly high.

"The fight against inflation is not over," Powell warned. "We will continue to monitor economic conditions closely and make adjustments to policy as needed, but our focus remains on bringing inflation back down to our target."

The Fed's hawkish stance comes as the US economy faces a complex set of challenges, including ongoing geopolitical tensions and a potential recession looming on the horizon. However, Powell stressed that the Fed's priority is to combat inflation, even if this means accepting some economic pain.

"We understand that rising interest rates can have an impact on economic activity, but we are committed to doing what is necessary to bring inflation down," he said. "Ultimately, a strong and stable economy requires stable prices."

Powell's remarks were met with a mixed reaction from market analysts. Some welcomed the Fed's unwavering commitment to tackling inflation, while others expressed concern about the potential for further rate hikes to stifle economic growth.

The Fed's next policy meeting is scheduled for July 25-26, where the central bank is expected to decide on its next interest rate move. While the possibility of a pause in rate hikes remains on the table, the Fed's commitment to fighting inflation suggests that cuts are unlikely in the near term.

Conclusion:

The Fed's focus remains firmly on bringing inflation under control, with Chair Powell signaling that rate cuts are not on the immediate agenda. The central bank's hawkish stance, while potentially impacting economic growth, reflects its determination to achieve price stability and ultimately create a strong and sustainable economy.