Federal Reserve Chairman Jerome Powell Said Today That The Fed Is Not Ready To Cut Interest Rates.

Wednesday, July 31, 2024, 4:15 P.M. ET. 2 Minute Read, By Jennifer Hodges: Englebrook Independent News,

WASHINGTON, DC.- Federal Reserve Chairman Jerome Powell said Wednesday afternoon that while there are signs the U.S. Economy is slowing, it is not ready to cut interest rates at this time.

     In the statement outlining its July meeting reports, the Committee states that recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have moderated, and the unemployment rate has moved up but remains low. While inflation has eased over the past year, it still remains somewhat elevated. In recent months, there has been some further progress toward the Committee’s 2 percent inflation objective.

     The Committee seeks to achieve maximum employment and an inflation rate of 2 percent over the long run. The Committee judges that the risks to achieving its employment and inflation goals are continuing to move into a better balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

     In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 present. In considering any adjustments to the target range, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.

     Further, the Committee stated it does not expect it would be appropriate to reduce the target range until it has gained greater confidence that the inflation is moving sustainably toward the 2 percent goal.

     In addition, the Committee will continue reducing its holdings of Treasury securities, and agency debt, and agency mortgage-back securities. Chairman Powell stated that the Committee is strongly committed to returning inflation to its 2 percent objective.

     However, in recent testimony to Congress, Federal Reserve Chair Powell acknowledged that the central bank had started the clock on lowering rates, saying acting “too late or too little could unduly weaken the economic activity and employment.”

     Although the Federal Reserve keeps the door open for possible rate cuts by the end of the year, It is becoming increasingly apparent that the U.S. may not see a rate cut by the end of this year, though many traders are predicting one in September. A better gauge for a potential rate cut in September will be when the July Consumer Price Index report is released on August 14, 2024. Until then, we will have to keep hoping.