Powell stresses message that US job market is cooling, possible signal of coming rate cut | Paul Wiseman

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WASHINGTON—Federal Reserve Chair Jerome Powell on Wednesday reinforced a message that the Fed is paying growing attention to a slowing job market and not only to taming inflation, a shift that signals it’s likely to begin cutting interest rates soon.

Federal Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, June 12, 2024. Powell testifies to the House Financial Services Committee on Wednesday, July 10, 2024, the second of two days of semi-annual testimony to Congress.

On Tuesday, when Powell addressed the Senate Banking Committee, he suggested that the Fed had made “considerable progress” toward its goal of defeating the worst inflation spike in four decades and noted that cutting rates “too late or too little could unduly weaken economic activity and employment.”“For a long time,” Powell said Wednesday, “we’ve had to focus on the inflation mandate.” As the economy roared out of the pandemic recession, inflation hit a four-decade high in mid-2022.

Powell told the House panel on Wednesday that to avoid damaging the economy, the Fed likely wouldn’t wait until inflation reached its 2 percent target before it would start cutting rates. Under questioning from several Republican lawmakers, Powell said the Fed and other financial regulators will overhaul a 2023 proposal, known as the “Basel III endgame,’’ that would raise the amount of capital that banks are required to hold against potential losses.

 

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