Federal Reserve Chair Jerome Powell issued his strongest signal yet that the central bank will soon begin cutting interest rates, saying the central bank intends to act to avoid further weakening of the U.S. labor market, the Wall Street Journal reported.
Fed officials are scheduled to hold their next meeting on Sep 17-18, and are widely expected to cut the benchmark federal funds rate.
The newspaper quoted the US central bank chairman in a recent speech at the bank’s annual meeting as saying: “The time has come to adjust the monetary policy pursued by the Federal Reserve,” referring to the policy of monetary tightening and raising interest rates. He stressed that they do not seek further decline in conditions in the labor market.
“The continued weakness in labor market conditions is unmistakable, and we will do everything we can to support a strong labor market while making further progress toward price stability,” Powell added.
The newspaper reported that Powell’s statements almost mark the end of the F
ed’s historic campaign to combat inflation, a campaign that Powell reinforced from the same platform two years ago when he indicated his willingness to accept recession as the price of reducing inflation.
It also quoted Mark Sommerlin, managing partner at the economic consulting firm Evenflo Macro, as saying that the Fed chairman’s speech could be seen as a clear shift towards supporting the labor market.
The Federal Reserve kept interest rates steady at its last meeting in late July, although many officials saw a case for cutting them.
Two days after the Fed meeting, the Labor Department announced that the unemployment rate had risen to its highest level in nearly three years, and that although inflation remains above the Fed’s 2 percent target, it has been steadily downward in recent months.
According to the newspaper, the most important question that financial markets and central bank officials are asking -and which they themselves do not know the answer to- is the size of the interest rate cuts schedu
led for next September.
Source: Qatar News Agency