By Gokhan Ergocun
ISTANBUL (AA) – To bring inflation down to targeted levels, the US Federal Reserve intends to use its tools but "if the economy evolves broadly as expected, (the) policy will move over time toward a more neutral stance," its chair Jerome Powell said on Monday.
Speaking at the National Association for Business Economics Annual Meeting, in Tennessee, he stressed: "The risks are two-sided, and we will continue to make our decisions meeting by meeting. As we consider additional policy adjustments, we will carefully assess incoming data, the evolving outlook, and the balance of risks."
The US economy is strong overall and has made significant progress over the past two years toward achieving its dual-mandate goals of maximum employment and stable prices, he stressed.
He underlined that labor market conditions are solid, having cooled from their previously overheated state, and inflation has also eased, on a sustainable path to 2%.
Mentioning how the Fed reduced the level of policy restraint by lowering the target range of the federal funds rate 0.5 percentage points, he said: "That decision reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in an environment of moderate economic growth and inflation moving sustainably down to our objective."
The Fed policy rate had been at a two-decade high since its July 2023 meeting, when core inflation was above 4%, well above the targeted level, and unemployment was 3.5%, near a 50-year low, he said.
In the 14 months since, inflation has moved down, and unemployment has moved up, in both cases significantly, he added.
"It was time for a recalibration of our policy stance to reflect progress toward our goals as well as the changed balance of risks," he said.