Rising confidence on inflation, solid labor market could put September rate cut on table: Fed chair

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve Chair Jerome Powell said rising confidence on inflation and solid labor market could put September rate cut on table for the central bank.

"The question will be whether the totality of the data, the evolving outlook and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market," Powell told a press conference after the conclusion of the Fed's two-day monetary policy meeting.

"If that test is met, the reduction in our policy rate could be on the table as soon as the next meeting in September," he added.

The Fed on Wednesday kept its federal funds rate unchanged in the 5.25%-5.5% target range, as widely expected, which is the highest level in 23 years.

"The second quarter inflation readings have added to our confidence and more good data would further strengthen that confidence," said Powell.

After soaring to 9.1% in June 2022, annual consumer inflation in the US significantly dropped to 3% in June 2023. Consumer prices annually rose 3% in June this year, also slowing from an increase of 3.3% that was recorded in May. It showed a decline of 0.1% in June, while it also managed to post a slowdown from May when it showed no change.

Powell said that the Federal Open Market Committee (FOMC) will continue to make its decisions meeting by meeting.

"We know that reducing policy restraint too soon or too much could result in a reversal of the progress we have seen on inflation. At the same time, reducing policy restraint too late or too little, unduly weakened economic activity and employment," he explained.