Federal Reserve Chairman Jerome Powell has indicated that the central bank is moving closer to cutting interest rates, citing increased confidence in the cooling of inflation. This announcement comes after three consecutive months of decreasing price pressures, marking a significant shift in the Fed's stance on monetary policy., Powell stated,"Our test for quite some time has been that we wanted to have greater confidence that inflation was moving sustainably down towards our 2% target.
4. Dual mandate consideration: The Fed is now looking more closely at both its inflation control and maximum employment mandates. While Powell avoided giving a specific timeline for rate cuts, he did address the possibility of action by September, stating,"We've been very clear that you wouldn't wait for inflation to get all the way down to 2% before cutting rates."
Recently the Fed’s monetary policy has been primarily focused on inflation reduction. However, Powell’s comments at the Economic Club of Washington indicate that the Fed may now return to a more balanced approach to reflect its “dual mandate” of inflation control and maximum employment.
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