Kelly, we will be going straight to Steve Leasman for the latest headlines on the Federal Reserve. Thank you, Dominic.
Fed Chairman Jay Powell spoke at an IMF press conference and stated that if it becomes appropriate to tighten policy further, the Fed will not hesitate to do so. He emphasized that the Fed will proceed with caution, carefully assessing the risks of both over and under tightening. Powell mentioned that the Fed is making decisions on a meeting-by-meeting basis.
He expressed determination, stating that they will continue their efforts until the job is done. Powell acknowledged that inflation is currently above target and that the Fed has a long way to go in bringing it back to the 2% target.
Additionally, he noted that while the labor market remains tight, there have been improvements in supply and a decrease in demand. He expects economic growth to moderate in the upcoming quarters, despite its strength in the third quarter. Regarding possible risks of stronger growth undermining the inflation process, Powell stated that it could lead to a response from monetary policy.
He described current policy as restrictive but expressed uncertainty about whether the Fed has achieved an appropriate level of interest rates. Powell emphasized that ongoing progress towards the 2% inflation target is not assured.
While acknowledging that inflation is being reduced through supply-side improvements and tighter monetary policy, he added that the extent of future achievements in lowering inflation remains unclear. Powell mentioned that the Fed will consider the possibility of pre-pandemic low interest rates returning or if we are in a period of permanently higher rates. He hinted at the potential for a rate hike and emphasized the Fed’s lack of confidence in reaching the desired 2% inflation target. Overall, Powell’s speech revealed the.