Lower federal interest rates could be coming as soon as next month, although Federal Reserve Chair Jerome Powell declined to commit to an exact date when speaking Friday at an economic symposium in Jackson Hole, WY.
The Fed raised rates 11 times from March 2022 through July 2023, so this would be the central bank’s first interest rate cut since 2020.
Although lowering interest rates is not certain, Powell also testified last month before the Senate Banking Committee during the Semiannual Monetary Policy Report to the Congress that interest rates may start to go down soon.
Although inflation has not yet reached the 2% target Powell was aiming for, he indicated that it has declined significantly .
“The time has come for policy to adjust,” Powell said Friday. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
He said that the Fed’s post-pandemic restrictive policy “helped restore balance between aggregate supply and demand, easing inflationary pressures and ensuring that inflation expectations remained well anchored.”
Powell’s speech was well received on Wall Street, with all three major U.S. stock indexes gaining more than 1% on Friday, and the benchmark S&P 500 nearing an all-time high, according to.Reuters.
“Powell is really data driven. The unemployment is not alarming but it’s certainly higher than it has been in the past and that would be something for him to take action on,” said Kim Forrest, chief investment officer at Bokeh Capital Partners, as reported by Reuters.
The Federal Open Market Committee will hold its next scheduled meeting on Sept. 17 and 18.
