The head of the US Federal Reserve hints at a new rate cut this month
Fed Chairman US Federal Reserve Jerome Powell indicated that the central bank is moving towards a new cut in interest rates during its meeting in late October, in light of the weakness of the labor market and continuing inflation fears.
Powell explained, during an economic conference in Philadelphia, that the Fed is seeking to achieve a balance between the risks of reducing interest ratesvery quickly or delayed, indicating that inflation is still gradually rising while the labor market is clearly declining.
Adjusting interest rates
He also indicated that the bank is close to ending the program of reducing the government bond portfolio, which has gradually declined since mid-2022 after reaching about $9 trillion, stressing the Fed’s keenness to avoid a crisis. Liquidity similar to that which occurred in 2019.
He indicated that the partial government closure since the beginning of October deprived the bank of basic economic data, which makes assessing the economic situation more difficult.
Powell defended the Fed’s policies in the face of recent political criticism, warning of legislators’ attempts to reduce the bank’s powers to pay interest on bank reserves, which is an essential tool. To adjust short-term interest rates.
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