The Wall Street Journal explained that the main interest rate adopted by the US Federal Reserve currently ranges between 5.25 percent and 5.5 percent, which is widely viewed as an obstacle to economic activity.
Expectations differed over whether the central bank would cut the rates by 0.25 percentage points or 0.5 percentage points at its September meeting, and investors are divided over what the bank will do at its two remaining meetings this year in November and December.
While Powell was firm in outlining the Fed’s goals, he did not provide specific details about how officials would achieve them, the newspaper said, noting that Powell’s silence left the door open to deeper interest rate cuts if the labor market showed signs of greater weakness in the coming weeks.
Fed officials are due to get another monthly jobs report and more readings on inflation before the September meeting.
The journal indicated that Central bankers have raised interest rates sharply in 2022 and 2023, determined to rein in the hi
ghest inflation rate in four decades. But the US economy has defied expectations of a slowdown despite rising borrowing costs, and inflation has fallen while the labor market has remained strong.
The US central bank is also seeking to achieve a soft landing, which occurs when it seeks to raise interest rates to rein in high inflation, without causing a recession.
However, the newspaper pointed out that the recent rise in unemployment rates has raised questions in light of the unemployment rate rising from 3.4 percent in April 2023 to 4.3 percent last July.
The inflation rate, using the Federal Reserves preferred measure, was 2.5 percent in June 2024 in its latest reading.
The Wall Street Journal concluded that the Federal Reserve’s moves in the coming weeks and months could be of great importance to the US economy and to Powell himself, who has worked at the central bank since 2012 and was promoted to the top position by former US President Donald Trump in 2018 and was chosen for a second term as chairman
by current President Joe Biden.
Source: Qatar News Agency