Federal Reserve Chair Jerome Powell signaled on Thursday that the central bank might keep interest rates steady in its upcoming November meeting, while emphasizing its dedication to reducing inflation to the 2% target.
Addressing the Economic Club of New York, Powell underscored that the Federal Reserve is vigilantly watching the economic trajectory, highlighting recent statistics that demonstrate sustained economic growth and labor demand. He articulated concerns, stating, “Any consistent evidence of growth exceeding expectations, or an unrelenting tightness in the labor market, could jeopardize further inroads on inflation and might necessitate more stringent monetary measures.”
However, Powell conveyed optimism about the Fed’s efforts against inflation, projecting a decline in inflation rates in the foreseeable future. He emphasized that decisions on monetary policy direction will be shaped by “a holistic view of incoming data, the shifting economic forecast, and an assessment of risks.”
The broader interpretation of Powell’s discourse suggests a probable rate freeze at the Federal Reserve’s November assembly. Remarkably, this would mark the central bank’s first pause in its rate-increment cycle since March.
From March onward, the Fed has increased interest rates by 525 basis points to tackle soaring inflation, currently at its peak in four decades. Although these increments have decelerated economic expansion, they have also marginally mitigated inflation in recent times.
Powell also touched upon global geopolitical uncertainties, recognizing them as “significant threats to worldwide economic dynamics.” He asserted the Federal Reserve’s commitment to understanding these unfolding scenarios for potential repercussions on the U.S. economic landscape.
Financial analysts deemed Powell’s remarks as leaning dovish, interpreting them as hints that the Federal Reserve might be approaching the climax of its rate-increasing phase. Following this revelation, the stock market experienced a subtle uptick.
