The US economy is in solid shape and the Federal Reserve intends to keep it that way, Federal Reserve Chair Jerome Powell said, Report informs referring to the MarketWatch.
The Fed’s goal all along has been to bring down inflation without a “painful rise in unemployment,” Powell said in remarks at the annual meeting of the National Association for Business Economics in Nashville.
“While the task is not complete, we have made a good deal of progress toward that outcome,” Powell said.
The Fed chair said the 50-basis-point cut in the central bank’s policy rate earlier this month was a sign of confidence that, if the Fed adjusts interest rates at an appropriate pace, “the strength in the labor market can be maintained in the context of moderate economic growth and inflation moving sustainably down to 2%.”
That is the definition of a “soft landing” for the economy.
Based on the central bank’s so-called dot-plot projections, Powell said the baseline is two more quarter-point rate cuts at the November and December meetings.
”If the economy performs as expected, that would mean two more cuts this year, a total of 50 more [basis points],” he said.
But the decision will depend on the data, he added.
The goal of the cuts is to get the policy rate down toward a more “neutral” stance, which the Fed says is around 3%. The Fed’s target rate is now in the range of 4.75% to 5%.