Pow Powell: Will interest rates be lowered?

Jerome Powell Suggests Possibility of Lowering Interest Rates at September Fed Meeting

The Chairman of the Federal Reserve of the United States, Jerome Powell, has indicated the possibility of lowering interest rates at the upcoming September meeting if the current trend of decreasing inflation persists. Inflation is nearing the Fed’s 2% target, while the unemployment rate has slightly risen above 4%.

Decision on Interest Rate Cut to Depend on Data

Powell emphasized that a potential interest rate cut will be considered at the September meeting if economic data confirm a decline in inflation. The central bank explicitly outlined its dual mandate of maximizing employment and ensuring price stability in its policy statement.

Fed Monitors Economic Indicators

Decisions regarding interest rates will be based on an analysis of economic indicators, although Powell noted they will not rely on individual data points. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, showed a 2.5% year-on-year increase in June.

Markets Follow Possibility of Interest Rate Cut

Despite maintaining the interest rate in the range of 5.25% – 5.50%, the potential 25 basis point cut has sparked interest in financial markets. Following Jerome Powell’s remarks, the S&P 500 gained 2.1%, while the Nasdaq Composite surged by 3.1%.

Fed Has No Plans for Central Bank Digital Currency Issuance

In his statements, Powell declared that the Federal Reserve of the United States currently has no plans for issuing a central bank digital currency (CBDC) and does not intend to change this stance in the near future. Powell is, however, monitoring the actions of other central banks regarding digital currencies, highlighting potential implications for the payment sector.

Matters related to monetary policy and economic development prospects remain key issues that will be monitored not only by economists but also by investors around the world. Decisions made by the Federal Reserve of the United States have a significant impact on the stability of financial markets and the economic conditions of domestic and global economies.