(Washington) The president of the American central bank (Fed), Jerome Powell, sees inflation continuing to slow in the coming months, and is considering further rate cuts, after a first cut since 2020 announced on September 18.
“Economic conditions open the way to a further slowdown in inflation,” the president of the American Federal Reserve was to say in Nashville (Tennessee) before the National Association for Business Economics Foundation (NABE), according to the text of his speech published in advance.
“The labor market is now more or less balanced. Long-term inflation expectations remain well anchored,” he said.
The Fed lowered its rates at its last meeting on September 18 for the first time since 2020.
She chose to lower them by half a percentage point directly rather than just a quarter of a point, to avoid seeing the job market deteriorate too sharply. Rates are now in the 4.75-5.00% range.
“In the future, if the economy generally develops as expected, policy will evolve over time towards a more neutral orientation”, that is to say lower rates, Jerome Powell will further emphasize.
“But we are not on any predefined course. The risks are twofold and we continue to make our decisions by meeting”, between inflation and employment, he will also say.
He will reiterate that the decision to cut rates by a half point directly “reflects our growing confidence that with appropriate recalibration of our policy, labor market strength can be achieved in an environment of economic growth.” moderate and inflation moving sustainably towards our objective”.
Inflation slowed in August. The PCE index, favored by the Fed and which it wants to reduce to 2%, thus fell to 2.2% over one year, compared to 2.5% in July. The CPI index stood at its lowest since February 2021, at +2.5% over one year.