Federal Reserve chair Jerome Powell said outright on Wednesday w𒁃hat financial markets had already guessed: If the economy continues on its current trajectory, lower interest rates are likely coming in September. 

At a press conference following the Fed’s decision to hold its benchmark fed funds rate steady at a 23-year high to fight inflation, Powell said Fed policymakers had even discussed lowering the rate—which would have come as a surprise to financial markets—but had ultimately decided to wait.

“A reduction in our policy rate could be on the table as soon as the next meeting in September,” Powell said. “We're getting close🤡r to the point at which it will be appropriate to reduce our policy rate, but we’re not quite at that point yet.”

Powell said no decisions had been made about future cuts and that the 📖Fed would react to whatever economic data comes out between Wednesday and Sept. 18, when the Fed’s policy committee is scheduled to meet again. 

“If we were to see, for example, inflation moving down quickly or more or less in line with expectations, and growth remains reasonably strong and the labor market remains consistent with its cu🎀rrent condition, then I would think that a rate cut could be on the table at the September meeting.”

Federal Reserve is Walking A Tightrope

Powell’s comments emphasized the tightrope the Fed is walking as it uses monetary policy to pursue the central bank’s 澳洲幸运5官方开奖结果体彩网:dual mandate of keeping inflation under control while ♐maintaining maxim𓆉um employment.

A higher fed funds rate pushes interest up on all kinds of loans. That tends to slow the economy, stifling inflation while risking hurting the labor market. Lower interest rates do the opposite, stoking the economy and encouraging hiring while risking fueling inflation.

After a year of keeping the rate at a 23-year high to stifle the post-pandemic surge o💧f inflation, the Fed is getting ready to pivot to prevent a surge of unemployment൩.

The inflation rate has fallen close to the Fed’s goal of 2% a year. Meanwhile, the unemployment rate has ticked up from the 50-year low it hit last year to 4.1%, 澳洲幸运5官方开奖结果体彩网:close to its pre-pandemic level and low by historical standards.

Powell’s comments were more or less what financial markets had expected, Van Hesser, chief strategist at KBR💯A, said in an interview with Investopedia. 

“The Fed did what the market really hoped it would do, and that is, acknowledge the attention given to both sides of its dual mandate, and we're seeing that shift now from being inflation-focused to a better balance between stable prices and maximum employment,” Hesser said. “That acknowledgment suggests that we're moving toward that September cut.”