Viewpoint: Powell Believes Interest Rates Still Somewhat Restrictive, Opening Room for Further Rate Cuts

BlockBeats News, September 24th, "Fed's Whisperer" Nick Timiraos' latest article: Federal Reserve Chairman Powell said that even after last week's rate cut, he still believes the Fed's rate stance is "still slightly tight," which means that if officials continue to assess recent labor market weakness more than inflation setbacks, there is still room for more rate cuts this year.

Powell broadly reiterated his views at last week's press conference after the rate cut. He emphasized the challenges the Fed faces in achieving its two main goals of maintaining low and stable inflation and promoting a healthy labor market.

Powell said, "Two-way risks mean there is no risk-free path. Cutting rates too much and too quickly could keep inflation running close to 3% rather than the Fed's 2% target, while maintaining a restrictive policy stance for too long could unnecessarily weaken the labor market."

Powell also reiterated his view that the summer slowdown in job growth this year made it necessary for last week's policy shift to pay more attention to the labor market than earlier in the year. The slightly tight rate setting puts the Fed in a favorable position to address potential economic developments. (Jinshi)