Speaking in New York, Federal Reserve Chair Jerome Powell admitted that the strength of the US economy will cause restraint in cutting interest rates.
“The US economy is in very good shape, and there’s no reason for that not to continue,” Powell said, “The good news is that we can afford to be a little more cautious” about decisions on rate moves, the Fed leader said.
Powell said September’s rate cut was “a strong signal that we were going to support the labor market if it continued to weaken.”
“What happened instead was in the couple of months after that, we got some data revisions, which strongly suggests that the economy is even stronger than we thought,” Powell said.
Powell’s remarks lead up to the Federal Reserve’s expected third interest rate cut this month.
Despite intervention by The Feds in reducing borrowing costs, borrowing money has not been made more affordable because interest rates for mortgages and credit cards track the yield on the 10-year US Treasury note. Last month, yields jumped to the highest level since the summer.
The expectation, by experts, is that Donald Trump’s tariffs and other policies will increase inflation. These predictions have sent bond yields upwards. Powell said there are too many unknown factors for the Fed to comment about tariffs, such as which specific products will be subject to tariffs and the length of any new trade policies.
Powell stated that he expects to have a positive relationship with the incoming administration, including with Scott Bessent, whom Trump has nominated as Treasury Secretary.
By CEO NA Editorial Staff
