New York: US Federal Reserve Chair Jerome Powell has expressed confidence in cutting interest rates for the first time in four years, saying that inflation was near the US central bank's two per cent target.
This comes as India's Reserve Bank of India (RBI) is focused on withdrawal on accommodation, and the Monetary Policy Committee's (MPC) stance continues to be disinflationary until a durable alignment of headline inflation with the target is achieved.
“The time has come for policy to adjust," Powell said in his keynote speech at the Fed's annual economic conference in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
His reference to multiple rate cuts was the only hint that a series of reductions is likely, as economists have forecast. Powell emphasized that inflation after the worst price spike in four decades inflicted pain on millions of households, appears largely under control.
According to the Fed’s preferred measure, inflation fell to 2.5 per cent last month, far below its peak of 7.1 per cent two years ago and only slightly above the central bank's two per cent target level.
Some Fed officials said a half-point Fed rate cut in September would become more likely if there were signs of a further slowdown in hiring. The next jobs report will be issued on September 6. In the last policy decision, Powell said if US inflation continues to fall, “a reduction in our policy rate could be on the table" when the Fed next meets in September.
