The countdown is on to Sept. 18 and the expected announcement by the Federal Open Market Committee of a rate cut.
The FOMC will meet Sept. 17-18, with Federal Reserve Chairman Jerome Powell to hold a press conference at the conclusion of the meeting.
Powell signaled the long-awaited news of rate cuts during his speech at the Federal Reserve Bank of Kansas City’s economic symposium in Jackson Hole, Wyo.
“The time has come for policy to adjust,” Powell said. “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.
“We will do everything we can to support a strong labor market as we make further progress toward price stability. With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2 percent inflation while maintaining a strong labor market. The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions.”
The Federal Reserve has held target rates at between 5.25 and 5.5 percent since July 2023 in an effort to rein in inflation.
Data from the Bureau of Labor Statistics in August showed the changing economic situation. The July job numbers from the BLS showed a softening in the labor market, with the economy adding only 114,000 jobs and unemployment rising to 4.3 percent. The 114,000 jobs added were 101,000 below the monthly average from the previous 12 months.
The annual inflation rate dropped to 2.9 percent in July. It was the first time the annual inflation rate was under 3 percent since March 2021. The all-items-less-food-and-energy index rose 3.2 percent, the smallest spike since April 2021. The all-items-less-food-and-energy index rose 3.2 percent, the smallest spike since April 2021.
“Overall, the economy continues to grow at a solid pace,” Powell said. “But the inflation and labor market data show an evolving situation. The upside risks to inflation have diminished. And the downside risks to employment have increased. As we highlighted in our last FOMC statement, we are attentive to the risks to both sides of our dual mandate.”
