Key Points
- Fed Chair Jerome Powell said Monday that the recent half percentage point interest rate cut shouldn’t be interpreted as a sign that future moves will be as aggressive.
- “We are not on any preset course,” he told the National Association for Business Economics.
- Powell expressed confidence in economic strength and sees inflation continuing to cool.
Federal Reserve Chair Jerome Powell said Monday that the recent half percentage point interest rate cut shouldn’t be interpreted as a sign that future moves will be as aggressive.
Instead, the central bank chief asserted during a speech in Nashville, he and his colleagues will seek to balance bringing down inflation with supporting the labor market and let the data guide future moves.
“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course,” he told the National Association for Business Economics in prepared remarks. “The risks are two-sided, and we will continue to make our decisions meeting by meeting.”
The remarks come less than two weeks after the rate-setting Federal Open Market Committee approved the half percentage point, or 50 basis point, reduction in the Fed’s key overnight borrowing rate.
Though markets had been largely expecting the move, it was unusual in that the Fed historically has only moved in such large increments during events such as the Covid pandemic in 2020 and the global financial crisis in 2008.