The Federal Reserve held interest rates steady on Wednesday and pushed out the start of rate cuts to perhaps as late as December as policymakers sketched out their view of an economy that remains virtually unchanged across its major dimensions for years to come. With growth and unemployment lodged at levels better than the U.S. central bank considers sustainable in the long run, Fed Chair Jerome Powell said policymakers were content to leave rates where they are until the economy sends a clear signal that something else is needed - through either a more convincing decline in price pressures or a jump in the unemployment rate.
So far, Powell noted in a press conference after the end of a two-day policy meeting, inflation had fallen without a major blow to the economy, and he said there was no reason to think that can't go on. "These dynamics can continue as long as they continue," Powell said. "We've got a good strong labor market. We think we've been making progress toward the price stability goal. We're asking ... is our policy stance about right? And we think yes, it's about right." The result is the Fed accepting a slow expected decline in inflation back towards its 2% target, with the central bank's preferred inflation measure - the personal consumption expenditures (PCE) price index - virtually unchanged at the end of this year from its current level and the number of rate cuts held to a single quarter-percentage-point reduction.
Source: Reuters