MNI BRIEF: Fed's Powell - Could Slow Cut Pace As Neutral Nears
MNI (WASHINGTON) - The Federal Reserve might need to slow the pace of rate cuts as it approaches a neutral rate of interest, Fed chair Jerome Powell said Thursday.
"It calls for us to be careful, move carefully, and as we ... get near the plausible range of neutral levels, it may be the case that we slow the pace of what we're doing just to increase the chances that we get this right," he said during an event hosted by the Dallas Regional Chamber and the Dallas Fed. Powell said current policy is restrictive, "but we can't say how restrictive it is." (See MNI INTERVIEW: Fed Cuts To Continue But Neutral Not Far-Tracy)
Asked about the Fed's framework review, Powell said the last review was responding to a world where the risk of low inflation had predominated. Perhaps "the base case should be more like a traditional reaction function, where you don't promise an overshoot" on inflation in response to previous undershoots as the current framework dictates, Powell said.