Powell points out that interest rate cuts are aimed at controlling economic risks, and expects inflation from commodity prices to persist until 2569.
Picture from the Board of Governors of the Federal Reserve System Facebook page.
Powell has decided to cut interest rates to 4.00-4.25% and signaled two more cuts within the year. Powell indicated that the labor market is beginning to slow and warned that inflationary pressures from commodity prices could continue to accumulate until 2.
On September 18, 2568, at 03.07:XNUMX a.m., CNBC reported that The US Federal Reserve (Fed) sent a key signal to investors on Wednesday after deciding to cut its policy interest rate by 0.25%. It also stated that interest rates may be cut two more times by the end of 2.
The latest decision drew just one dissenting vote from newly appointed Federal Reserve Governor Stephen Miran. However, the Federal Open Market Committee (FOMC) outlook for next year is more mixed, with so-called "dot-plot" projections suggesting just one more rate cut is likely, while some members see up to three cuts as early as 1.
During the press conference Mr. Jerome Powell, Chairman of the Fed He said the decision reflected the need to control economic risks.
“You can see this as a risk-management interest rate cut.” Powell said, adding that “The current risk landscape is different.” As the labor market begins to show signs of slowing, relative to inflationary pressures
The Fed has been keeping interest rates high as inflation remains above its 2% target, while Powell expressed concern that tariffs implemented by the Trump administration could accelerate price increases.
Powell noted that companies have not yet fully passed on the costs of the tariffs to consumers, but expects the impact to become more pronounced. “Throughout the rest of this year and into next year”
Meanwhile, Powell warned that the effects of inflation from commodity prices are expected to continue to accumulate through the end of this year and throughout 2569, following the Fed's 0.25% interest rate cut.
“We are beginning to see that commodity prices are driving inflation higher, and in fact, price increases account for a significant portion, if not all, of this year's inflation increases. … While the impact is currently small, we expect it to continue to accumulate throughout the rest of this year and into next year.”
The US Consumer Price Index (CPI) rose 2.9% year-on-year last month, the biggest gain since January, as inflation has accelerated mostly on a month-on-month basis since April.
refer : cnbc.com
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