MNI: Fed's Powell Says Can Proceed 'Carefully' With Rate Cuts
MNI (WASHINGTON) - Federal Reserve Chair Jerome Powell said Thursday a strong economy means policymakers do not need to be in any rush to lower interest rates toward more neutral levels.
"The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully," Powell said in prepared remarks to a conference at the Dallas Fed.
"We are moving policy over time to a more neutral setting. But the path for getting there is not preset."
Powell said he's confident the Fed can lower rates without unduly hurting the labor market, which he described as having cooled but still strong.
"The labor market remains in solid condition, having cooled off from the significantly overheated conditions of a couple of years ago, and is now by many metrics back to more normal levels that are consistent with our employment mandate. The most recent jobs report for October reflected significant effects from hurricanes and labor strikes, making it difficult to get a clear signal," the Fed chief said.
"We see the risks to achieving our employment and inflation goals as being roughly in balance."
His comments come after Labor Department data this week showed consumer prices are still running a bit too hot for the central bank's comfort, with core CPI rising 0.3% for an annual increase of 3.3%. (See MNI INTERVIEW: Fed Cuts To Continue But Neutral Not Far-Tracy)
Powell stressed the significant improvement in the inflation outlook following the Fed's aggressive rates hikes starting in March 2022.
"Our aim has been to return inflation to our objective without the kind of painful rise in unemployment that has often accompanied past efforts to bring down high inflation. While the task is not complete, we have made a good deal of progress toward that outcome," said Powell.