ADDS COMMENTS
By Ovunc Kutlu
ISTANBUL (AA) - US Federal Reserve Chair Jerome Powell said Wednesday that inflation in the US "eased substantially" after the central bank delivered its first interest rate cut in more than four years.
The Fed lowered the interest rate by 50 basis points to the range of 4.75% - 5.0%, starting its monetary easing aggressively.
Powell said the rate cut reflects "growing confidence" among the Federal Open Market Committee (FOMC) members that inflation is falling to 2%.
"We've been very patient about reducing the policy rate," he said at a post-meeting news conference. "(While) other central banks around the world cut (interest rates), many of them several times, we've waited.
"That patience really paid dividends in the form of our confidence that inflation is moving sustainably toward 2%," he added.
The upside risks to inflation have diminished and the downside risks to employment have increased, as inflation has declined and the labor market has cooled, he said.
The Fed chair warned that reducing the monetary policy restraint too quickly could hinder progress on inflation, while reducing the policy restraint too slowly could "unduly weaken" economic activity and employment.
He said the "recalibration" of the policy stance will help maintain the strength of the US economy and the labor market, while it would continue to enable further progress on inflation as the bank begins the process of moving toward a more "neutral stance."
"If the economy remains solid and inflation persists, we can dial back policy restraint more slowly. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we are prepared to respond," he explained.
Monetary policy is "well positioned" to deal with the risks and uncertainties the Fed faces in pursuing both sides of its dual mandate, he said.
The chair, however, warned that nobody should look at a 50 basis points rate cut and regard it as "the new pace" in monetary easing.
"We’re going to go carefully meeting by meeting and make our decisions as we go," he said.