Win McNamee
Fed Chair Acknowledges Strong US Economy
Speaking on a “60 Minutes” episode aired on Sunday, Federal Reserve Chair Jerome Powell expressed confidence in the strength of the U.S. economy. Powell highlighted the robustness of the labor market, noting the low 3.7% unemployment rate, and indicated that the Federal Reserve can afford to be cautious in deciding the next steps for adjusting interest rates.
Prudent Monetary Policy Amidst Inflation Concerns
Powell cautioned against premature rate cuts, citing the risk of pushing inflation above the Fed’s 2% target. Conversely, delaying the rate cuts could potentially lead to a recession. The Chair emphasized the importance of carefully evaluating the timing for reducing interest rates, stressing the need for more evidence indicating a sustained decline in inflation before implementing any policy loosening. This approach aligns with Powell’s earlier comments at the Fed’s press conference when the policy rate was maintained at 5.25%-5.50%.
Commitment to Restoring Price Stability
Powell expressed confidence in the progress made but emphasized the necessity to fully restore price stability for the public’s benefit. He regretted not tightening policy earlier during the surge in 2021 inflation and stressed the importance of maintaining low and predictable inflation to alleviate its impact on people’s daily lives.
No Anticipated Banking Crisis despite Real Estate Slump
Addressing concerns about the commercial real estate (CRE) market, Powell dismissed the possibility of a banking crisis. While he acknowledged potential challenges for smaller banks, such as collapses or mergers, Powell stated that a scenario triggering a financial crisis similar to that of 2008 is not foreseen.
Non-Political Approach to Policy Decisions
In response to queries about a potential rate cut in a presidential election year, Powell emphasized the Fed’s apolitical stance. He reiterated that policy decisions are solely driven by economic data, with no influence from political considerations.
With reporting by Joshua Fineman
