US Fed chair says ‘the time has come’ to start cutting interest rates
- Many analysts expect the Fed to move ahead with a more cautious quarter-percentage-point rate cut in September
Federal Reserve chair Jerome Powell said on Friday that the “time has come” for the United States to start cutting interest rates, adding that his “confidence has grown” that the battle against inflation is on track.
“The time has come for policy to adjust,” he said in a keynote speech at the Jackson Hole Economic Symposium in the western US state of Wyoming, in unusually direct remarks about the likely path of monetary policy.
“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 added.
US stocks rose on Powell’s remarks, with all three major indices on Wall Street up sharply at around 10am local time in Washington.
The annual economic symposium in Wyoming gives Powell a global platform to share the Fed’s thinking with financial markets. He had said a few weeks ago that policymakers could cut rates “as soon as” September if the labour market remained solid and inflation continued to ease.
The Fed’s benchmark lending rate currently sits at a 23-year high of between 5.25 and 5.50 per cent, cooling demand in the world’s largest economy ahead of November’s presidential elections, in which inflation and the cost of living have taken a central role.
