Fed Signals Two Quarter-Point Rate Cuts by End of Year

New York, NY, October 1, 2024-"Federal Reserve chair Jerome Powell said officials would continue to reduce interest rates from a two-decade high to maintain solid economic growth, but they didn’t currently see a reason to lower rates as aggressively as they did at their most recent meeting,” reports the Wall Street Journal.

“‘Overall, the economy is in solid shape; we intend to use our tools to keep it there,’ Powell said Monday at a conference in Nashville. Because officials have a relatively favorable economic outlook, ‘this is not a committee that feels like it’s in a hurry to cut rates quickly,’ he added.

“The Fed lowered interest rates by a half-percentage point at its meeting two weeks ago, opting for a bolder start in making its first rate reduction since 2020. That dropped the central bank’s benchmark rate to a range between 4.75% and 5%, and down from its highest level in two decades.

“Powell said officials were focused on bringing rates down to a level that neither spurs nor slows economic activity. To lean against expectations that officials might continue making large cuts, Powell cited economic projections they released two weeks ago that showed most officials penciled in the equivalent of two more quarter-point cuts this year. The Fed has two more meetings this year.

“‘If the economy performs as expected, that would mean two more [quarter-point] cuts this year,’ Powell said during a moderated discussion. Rates could move ‘over time’ toward a more neutral stance if economic activity remained healthy, though he said rates weren’t on a preset path, meaning bigger cuts were possible if the job market shows greater deterioration.”