US Fed Chair Jerome H. Powell has made it clear the Federal Reserve will cut rates on Sept. 18, as the central bank turns the corner in its fight against inflation.
Speaking in his most closely watched speech of the year, Jerome H. Powell, the chair of the Federal Reserve, clearly signaled that the central bank was poised to cut interest rates in September.
And while Mr. Powell stopped short of giving a clear hint at just how large that move might be, he forcefully underscored that the central bank stands prepared to adjust policy to protect the job market from weakening further and to keep the economy on a path for a soft landing.
“The time has come for policy to adjust,” Mr. Powell said during the Kansas City Fed’s annual conference at Jackson Hole in Wyoming. “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 then added: “We will do everything we can to support a strong labor market as we make further progress toward price stability.”
Mr. Powell’s speech was his firmest declaration yet that the Fed is turning a corner in its fight against inflation. After more than a year of holding interest rates at 5.3 percent, the highest level in more than two decades, officials finally have enough confidence to change their stance by cutting rates at their Sept. 17-18 meeting.
Policymakers have been using those high rates to try to cool the economy and, by doing so, wrestle down rapid inflation. But as price increases slow substantially and the job market shows signs of wobbling, officials no longer need to hit the brakes quite so hard.
The big question now is just how big a September rate cut will be, and how rapidly the Fed will lower borrowing costs in the months that follow. Policymakers meet again in November and December.
Mr. Powell did not provide a clear outline for the path ahead, but by focusing on risks to the labor market, he did clearly hint that central bankers are willing to cut interest rates quickly rather than gradually if the job market appears to be at risk.
