explicitly refused to offer forward guidance about interest rate policy in his Capitol Hill testimony this week, which we think is an indication that. However, he emphasized that the Fed remains cautious about reducing rates prematurely.
While Powell acknowledged recent progress in inflation data, he refrained from committing to a specific timeline for rate cuts. His careful wording and explicitsuggests to us that the Fed is not going to cut rates before the November election. Powell’s comments come at a critical juncture for the Fed. Having maintained the highest interest rates in decades for about a year, the central bank is now considering when to begin easing. However, Powell made it clear that the Fed is focused on“If we loosen policy too late or too little, we could hurt economic activity. If we loosen policy too much or too soon, then we could undermine the progress on inflation,” Powell said on Wednesday.
. A move to cut interest rates on the eve of the election would ignite a political firestorm that could result in significant changes to the statutory mandate of the Fed, including perhaps a narrowing of its current dual mandate to a single mandate of price stability.is no longer as tight as it was last year, it does not appear to be rolling over. Unemployment rose in June—but for the “good reason” of more people looking for work.
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