Fed Chair Jerome Powell conveyed in a speech overnight that the central bank sees no immediate need to reduce interest rates quickly. He added that with an “appropriate recalibration” of monetary policy, Fed believes it can sustain economic growth and robust employment while guiding inflation back down to its 2% target in a sustainable manner.
He highlighted that the risks to achieving the Fed’s employment and inflation objectives are “roughly in balance,” and emphasized that policymakers remain “attentive to the risks to both sides.”
Powell noted that Fed is gradually moving policy toward a “more neutral setting”. However, he stressed that the path to reaching this neutral rate is “not preset.”.
Importantly, Powell remarked that “the economy is not sending any signals that we need to be in a hurry to lower rates.” The prevailing economic strength provides Fed with the ability to approach monetary decisions “carefully.”
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