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Federal Reserve Chairman Confirms Start of Rate Cuts in US: ‘The Time Has Come’

The US Federal Reserve (Fed) has given in and confirmed that it will lower interest rates. “The time has come for (monetary) policy to adjust,” its chairman, Jerome Powell, said on Friday at the Jackson Hole symposium, the meeting that brings together central banks in mid-August.

“I am increasingly convinced that inflation is on a sustainable path back to 2%,” Powell said.

In his speech, the Fed chairman stressed that the US economy continues to grow at a solid pace, but that inflation and labor market data show an “evolving” situation, in which the risks of price increases “have diminished.”

In this sense, Powell considers that after a pause in early 2024, “progress toward the 2% target has resumed,” so that the inflation rate is now much closer to the target. “The direction to follow is clear, and the timing and pace of rate cuts will depend on the data available, the evolution of the outlook and the balance of risks,” he noted.

Powell’s decision comes just weeks after global stock markets suffered a black Monday amid fears of a slowdown in the US economy. A fear of a possible recession, which would lead to the destruction of jobs, where excessive monetary austerity by central banks plays a key role, which would now change with the Fed’s decision to lower interest rates.

In July, Powell himself, like his counterpart at the European Central Bank (ECB), Christine Lagarde, clung to “the strength of the labor market” in both economies to delay the cut in official interest rates. In the case of the United States, the “price” of the currency has remained at 5.5% since the end of July a year ago.

However, Powell’s announcement on Friday does not mean an immediate change in policy, as it will have to wait until the meeting of the Fed’s Federal Open Market Committee scheduled for September 17-18.

Source

Jeffrey Roundtree
Jeffrey Roundtree
I am a professional article writer and a proud father of three daughters and five sons. My passion for the internet fuels my deep interest in publishing engaging articles that resonate with readers everywhere.
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