Powell announces upcoming rate cuts for US economy

In a recent address in Nashville, Tennessee, Federal Reserve Chair Jerome Powell indicated that the U.S. economy remains robust, with plans for further interest rate cuts. The Fed's current key interest rate stands at approximately 4.8%, with a target neutral rate around 3%. Powell emphasized that the Fed's objective is to maintain a healthy economy and job market rather than to intervene in a struggling economy. Inflation has decreased to 2.2%, while core inflation rose slightly to 2.7%. The unemployment rate has dipped to 4.2%, although it remains higher than the previous year's low of 3.4%. Hiring has slowed significantly, averaging just 116,000 jobs per month over the last three months, which is about half the pace from a year ago. Powell noted that the job market is solid but cooling, and the Fed aims to prevent a further rise in unemployment. The Fed's decision to consider additional rate cuts is influenced by the recent slowdown in hiring and the uptick in unemployment, which could hinder economic growth. Powell's remarks reflect a shift in the Fed's focus towards balancing job growth and inflation control, moving away from an exclusive emphasis on combating inflation. Some Fed officials support aggressive rate cuts, while others advocate for a more cautious approach. The overall sentiment is that the Fed is recalibrating its policies to sustain economic strength amid moderate growth and declining inflation rates. The upcoming meetings in November and December will be crucial in determining the pace and extent of these rate adjustments.