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Gang Violence Is Moving to the Amazon’s Fast-Growing CitiesFederal Reserve Chair Jerome Powell said the central bank will lower interest rates “over time,” while again emphasizing that the overall US economy remains on solid footing.
A neutral policy is one that neither stimulates nor holds back the economy. The Fed’s current benchmark rate, which officials lowered to a range of 4.75%-5% earlier this month, is widely regarded as still restricting economic activity. The central bank lowered borrowing costs by a half percentage point earlier in September, the first reduction since 2020 and a larger-than-usual move. Officials have described the outsize cut as one aimed at protecting a slowing labor market from further weakening.
That’s provided officials more confidence that inflation is moving toward their goal, allowing them to place a greater focus on shoring up the labor market. “Our goal all along has been to restore price stability without the kind of painful rise in unemployment that has frequently accompanied efforts to bring down high inflation,” Powell said. “While the task is not complete, we have made a good deal of progress toward that outcome.”Powell acknowledged the decline in housing-related inflation has been sluggish, but expressed confidence that in time it would further taper.
A handful of Fed officials have left the door open to such a move, saying any sign of serious weakening in the labor market could warrant another big cut. Fed Governor Michelle Bowman, who dissented against the recent half-point reduction in favor of a smaller, quarter-point cut, has emphasized that she sees lingering inflation risks. She said the Fed should lower interest rates at a “measured” pace.
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