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• 'The current economic landscape does not signal urgency for rate reductions,' said Powell.
• Market analysts anticipate another quarter-point cut in December.
• Despite these expectations, Powell refrained from making concrete predictions about the rate path.

Federal Reserve Chairman Jerome Powell expressed on Thursday that the robust state of the US economy allows for a patient approach in determining the timing and extent of future interest rate cuts.

“The current economic landscape does not signal urgency for rate reductions,” Powell mentioned during a speech to business leaders in Dallas.

“The strength of the US economy enables us to make thoughtful and deliberate decisions.”

Powell’s assessment painted an optimistic picture, emphasizing that the US economy is performing better than any other major global economy.

He highlighted that while job growth in October fell short—mainly due to storm disruptions in the Southeast and labor strikes—the job market overall remains resilient. The latest nonfarm payroll figures showed a modest gain of 12,000.

He noted that although unemployment rates have been on the rise, they have stabilized in recent months and are still low compared to historical norms.

Turning to inflation, Powell pointed out that progress has been broad and continuous, with Fed officials anticipating that inflation will gradually move closer to the target rate of 2%.

Although recent data reflected a slight increase in consumer and producer prices, both indices suggest that inflation, as per the Fed’s preferred measure, stood at 2.3% in October, or 2.8% when excluding food and energy costs.

“Inflation is trending much nearer to our 2% long-term goal, but we have not reached it yet. We remain committed to achieving this target, even if the path there proves occasionally uneven,” Powell stated.

These comments come shortly after the Federal Open Market Committee (FOMC) lowered the benchmark interest rate by 25 basis points, setting it within the 4.5%-4.75% range. This move followed a 50-basis-point cut in September.

Powell described these rate adjustments as part of a broader shift in monetary policy, transitioning from a primary focus on controlling inflation to also supporting job market stability.

Market analysts anticipate another quarter-point cut in December, with the potential for further adjustments in 2025.

Despite these expectations, Powell refrained from making concrete predictions about the rate path.

He emphasized that the Fed aims to bring rates to a neutral level that neither stimulates nor restrains growth, though the exact endpoint remains uncertain.

“With appropriate policy recalibrations, we are confident the economy and labor market can remain strong, while inflation trends downward toward our 2% target,” Powell said.

“We are gradually moving policy to a neutral stance, but there is no predetermined roadmap for this process.”

Additionally, the Fed has been letting proceeds from its substantial bond holdings roll off its balance sheet each month.

Powell did not indicate when this practice might cease.

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