Federal Reserve Chair Jerome Powell highlighted a complex economic outlook in his final remarks before the Federal Reserve’s last rate-setting meeting of the year, emphasizing the need for a cautious approach to monetary policy. Speaking at The New York Times DealBook Summit, Powell provided insights on inflation, economic growth, and interest rates as the Federal Open Market Committee prepares to meet on Dec. 17-18.
“Growth is definitely stronger than we thought, and inflation is coming a little higher,” Powell said during his interview with Andrew Ross Sorkin. “The good news is that we can afford to be a little more cautious as we try to find neutral.”
The Fed began cutting interest rates in September as inflation showed signs of cooling. However, the recent resilience in economic growth and stubborn inflation complicate the central bank’s decisions. “The picture is actually stronger than it was then,” Powell noted, reflecting on the economy’s unexpected vigor.
The American economy has continued to defy recession forecasts with robust consumer spending, solid wage growth, and improving productivity. While unemployment has stabilized and growth remains strong, inflation has proven stickier than anticipated.
“We’re now on a path to bring rates back down to a more neutral level over time,” Powell explained. However, he did not specify whether a rate cut would occur at the December meeting, adding uncertainty to the Fed’s immediate plans.
The central bank’s current benchmark rate of 4.5 to 4.75 percent remains under scrutiny as officials assess the appropriate pace of future cuts, balancing the need to support growth without reigniting inflationary pressures.
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