Nashville, Tennessee | Federal Reserve chairman Jerome Powell indicated on Monday (Tuesday AEST) that the US central bank would likely stick with quarter-percentage-point interest rate cuts moving forward.
Powell said the central bank was not rushing to cut rates after new data boosted confidence in ongoing economic growth and consumer spending.
“This is not a committee that feels like it is in a hurry to cut rates quickly,” Powell told a National Association for Business Economics conference, even though the policy-setting Federal Open Market Committee kicked off its easing cycle with a larger-than-expected half-percentage-point reduction at its September 17-18 meeting.
“We will do what it takes in terms of the speed with which we move,” Powell said, to try to keep inflation progressing towards the Fed’s 2 per cent target while maintaining a low unemployment rate.
But, with discussion over whether the US central bank might approve another large reduction to account for the fast decline of inflation since last year, Powell said the baseline was currently for two quarter-percentage-point reductions by the end of this year, as indicated in policymakers’ updated economic projections released earlier this month.
His comments rest heavily on confidence in continued economic growth, buoyed by recent data revisions that raised income estimates, spending and savings and showed that gross domestic income is growing faster than thought.
The revisions to government reports on GDI have removed a “downside risk to the economy and suggests spending can continue at a healthy level”, Powell said.
