Federal Reserve Chairman Jerome Powell Announces 50 Basis Points Cut in Policy Rate
After the September meeting, Federal Reserve Chairman Jerome Powell made the decision to cut the policy rate, federal funds rate, by 50 basis points to the range of 4.75%-5%. In the post-meeting press conference, Powell addressed the reasoning behind this decision and responded to questions from the media.
Key Quotes from Chairman Powell
- “Immigration is one of the things that has allowed unemployment rate to rise.”
- “Further declines in job openings will translate more directly into unemployment.”
- “My own sense is we are not going back to negative rates for long-term bonds; it feels neutral rate is higher than it was.”
- “It feels to me that neutral rate is probably significantly higher than it was pre-pandemic.”
- “Fed makes decisions based on its service to American people.”
- “Our decisions are never about politics or anything else.”
- “Our job is to support the economy on behalf of the American people.”
- “If we get it right, will benefit the American people.”
Analysis of Chairman Powell’s Remarks
Chairman Powell’s decision to cut the policy rate by 50 basis points reflects the Federal Reserve’s commitment to supporting the economy and the American people. By lowering the federal funds rate, Powell aims to stimulate economic growth, encourage borrowing and spending, and ultimately reduce unemployment rates.
Key takeaways from Powell’s comments include:
Impact of Immigration on Unemployment
Powell highlighted the role of immigration in allowing the unemployment rate to rise, suggesting that the labor market dynamics are influenced by factors beyond domestic policies.
Job Openings and Unemployment
He emphasized that further declines in job openings will lead to higher unemployment rates, indicating the importance of job creation and workforce development in sustaining economic growth.
Neutral Rate Outlook
Powell expressed his view that the neutral rate is unlikely to return to negative levels for long-term bonds, signaling a shift in the interest rate environment towards a higher neutral rate post-pandemic.
Overall, Chairman Powell’s remarks underscore the Federal Reserve’s commitment to economic stability and its dedication to serving the American people through sound monetary policy decisions.