The Fed is widely expected to cut rates at its next meeting in September.
Watch the 6abc Philadelphia 24/7 stream featuring Action News, AccuWeather and Entertainment Federal Reserve Chair Jerome Powell on Friday indicated that the central bank would soon begin cutting interest rates.
His reference to multiple rate cuts was the only hint that a series of reductions is likely, as economists have forecast. Powell emphasized that inflation, after the worst price spike in four decades inflicted pain on millions of households, appears largely under control:According to the Fed's preferred measure, inflation fell to 2.5% last month, far below its peak of 7.1% two years ago and only slightly above the central bank's 2% target level.
By cutting rates, he said, "there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market." "The cooling in labor market conditions is unmistakable," the Fed chair said. "Job gains remain solid but have slowed this year. ... We do not seek or welcome further cooling in labor market conditions."
Powell also addressed criticism that the Fed was too slow to raise rates even as inflation had begun surging once the pandemic recession ended. Higher rates are intended to cool borrowing and spending, slow the economy and tame price increases. "The good ship transitory was a crowded one, with most mainstream analysts and advanced-economy central bankers on board," Powell said. "I think I see some ship-mates out there today," he said, in an ad-libbed remark addressed to the economists and central banks assembled for the conference.
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