The Federal Reserve Chair, Jerome Powell, has been vocal regarding recent speculation over potential rate cuts, calling it premature and unchecked. His statement not only signals a potential for taking a more hawkish stance, but also serves as a reminder that the Federal Reserve is still in charge.
In a recent speech, Powell reaffirmed his commitment to fomenting sound monetary policy and expressed his belief that the Federal Reserve Board has the tools and will use them to ensure the stability of the United States’ economy.
The remarks expressed concern over the possibility of cutting rates to boost the economy in an attempt to jumpstart growth, but also asserted that such a tactic is not without risk and not necessarily a given. He was clear in his opinion that simply cutting rates may not be the best option, and that the Fed should weigh other tools as well.
Powell noted that, while there may be short-term benefits, the long-term benefits may not be worth the costs, and that the Fed needs to look beyond short-term growth to provide lasting stability to the economy. Additionally, Powell stated that further increases in rates could also be warranted if economic data calls for it, suggesting that the Fed needs to be agile and alert on both sides of the spectrum.
Overall, Powell’s speech both reminded the public of the Federal Reserve’s commitment to a sound monetary policy and cautioned against too much speculation. With 3 more rate hikes potentially on the horizon, it appears the Fed will walk a path somewhere between cutting rates and raising them, seeking to create a balanced environment of both growth and stability.
