Federal Reserve Chairman Jerome Powell stated today at a conference hosted by the National Association for Business Economics that although inflation is gradually slowing, the U.S. labor market remains robust. He also hinted that there may not be a significant rate cut at the Fed's next two meetings.
During the Q&A session, Powell said:
"This is not a committee eager to cut rates quickly. Ultimately, we will be guided by the data that will be released soon."
The U.S. central bank began its long-awaited easing policy earlier this month, marking the first cut in the benchmark interest rate in four years. The first significant cut of 50 basis points after maintaining rates at a twenty-year high for over a year is seen as a major move.
Powell indicated that if economic performance meets expectations, there are likely to be two more rate cuts this year, adding, "The federal funds rate will decrease by 50 basis points by the end of the year."
At the same time, according to FedWatch data, traders' expectations for a 25 basis point rate cut by the Fed in October have further increased, rising from 46% the previous day to 65%. Meanwhile, financial market participants expect the target rate range to be 4.00%-4.25% after the December meeting, which is 75 basis points lower than the current level.
The Fed has been trying to create conditions for a so-called "soft landing" for the economy, where inflation decreases without a significant rise in unemployment. Although the Fed is increasingly confident about this, Powell stated that the central bank is still prepared to adjust its policy based on the data:
"If the economic slowdown exceeds our expectations, we can cut rates more quickly; if the slowdown is less than expected, we can slow the pace of rate cuts. We will adjust our pace of action as needed."
Despite Powell signaling ongoing rate cuts, there has been no boost for Bitcoin, which even briefly fell below $63,000 this morning, before recovering to above $63,000 at the time of writing.