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Powell Indicate One More Cut in 2024

Jerome Powell, Powell

In recent statements, Federal Reserve officials have signaled a more measured approach to rate cuts for 2024, highlighting a single anticipated reduction amid ongoing economic evaluations.

Federal Reserve Chair Jerome Powell, in his address following the June meeting, emphasized the Fed’s cautious stance. “We are committed to our dual mandate of achieving maximum employment and stable prices. While economic indicators show resilience, inflation remains above our target” Powell stated. This reflects a broader consensus among Fed officials, who are recalibrating their forecasts in light of evolving economic conditions.

Powell elaborated on the Fed’s strategy, underscoring the importance of flexibility and data-driven decisions. “The economic landscape is dynamic, and our policy decisions will continue to be guided by incoming data. We anticipate just one rate cut in 2024, contingent on sustained progress towards our inflation goals” he noted.

The recent Federal Reserve meeting revealed a nuanced approach to monetary policy, balancing the need to support economic growth while curbing inflationary pressures. Officials have reduced their rate cut projections, aligning with Powell’s message of cautious optimism.

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Powell acknowledged the challenges ahead, stating, “We recognize the complexities of the current economic environment and remain vigilant in our efforts to steer the economy towards our objectives.” This sentiment was echoed across various platforms, including Bloomberg, which highlighted the Fed’s nuanced shift in policy direction. About shift in policy direction, Powell says they need to see more “good data” before changing the interest rate and adds to that by saying policy is “well-positioned” now. “If the economy remains solid and inflation persists we’re prepared to maintain” the current target rate, Powel adds.

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“We see today’s report as progress” and Powell notes of the CPI release serve to inspire confidence.

Talking about labor, Powell said, “We’ve seen labor for supply come up quite a bit through immigration and through recovering participation. That’s ongoing, mostly now through the immigration channel, but still we’ve had some increases in prime-age labor force.”

Powell, on the neutral rate, says Fed officials are “coming to the view that rates are less likely to go down to their pre-pandemic level.”

Powell, on the whether restictions are sufficient, says “As time has gone by, the question of how restrictive is policy has become one that everyone is asking, and we’re asking it too, and, you know, my answer has been that policy is restrictive. The question of whether it’s sufficiently restrictive is going to be one we know over time.” and he justifies by adding “If things are painful now, it would be even worse if inflation stayed high for a prolonged period.”

The Fed’s latest decision comes amid mixed economic signals, with robust job growth contrasted by persistent inflation. The central bank’s commitment to a gradual rate cut trajectory underscores its focus on maintaining economic stability while addressing inflation concerns.

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