November 14, 2024
Economic Outlook
Chair Jerome H. Powell
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Given progress toward our inflation goal and the cooling of labor market conditions, last week my Federal Open Market Committee colleagues and I took another step in reducing the degree of policy restraint by lowering our policy interest rate 1/4 percentage point. [After lowering the fed funds rate 0.5% in September.]
…
We see the risks to achieving our employment and inflation goals as being roughly in balance, and we are attentive to the risks to both sides. We know that reducing policy restraint too quickly could hinder progress on inflation. At the same time, reducing policy restraint too slowly could unduly weaken economic activity and employment…
The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully. … [end quote]
This is Fedspeak aimed at the markets. Powell is telling traders not to expect rapid cuts in the fed funds rate as long as the situation remains stable. At least 3 times over the past 2 years, the markets have reacted badly when the Fed didn’t cut the fed funds rate when they expected.
Wendy