Powell downplays recession concerns amid solid economic growth
Key Takeaways
- Powell remains confident that the economy will be resilient despite external risks.
- Inflation nears Fed’s target, prompting a cautious but flexible policy response.
Share this article
Federal Reserve Chair Jerome Powell today expressed optimism about the US economy during a Federal Open Market Committee (FOMC) press conference, downplaying the likelihood of a recession.
“I don’t see anything in the economy right now that suggests the likelihood of a downturn is elevated,” he said, citing solid growth, cooling inflation, and a strong labor market.
The Federal Reserve adjusted its monetary policy, lowering the target range for the federal funds rate to 4.75%–5%, reflecting progress in controlling inflation.
“Inflation is now much closer to our objective, and we have gained greater confidence that inflation is moving sustainably toward 2%,” Powell noted.
Although the labor market remains relatively strong, Powell emphasized the need for vigilance.
“Retail sales show the economy is growing at a solid pace, which should support labor markets,” he said, adding that wages and participation rates are healthy, but the labor market “bears close watching.”
While the Fed remains cautious about easing policy too quickly, Powell stated, “We now see the risks to achieving our employment and inflation goals as roughly in balance.” Despite external risks, he remains confident in the resilience of the economy.
Future policy
Powell stressed that the recent 50 basis point rate cut shouldn’t be seen as the norm, with the Fed adopting a flexible, meeting-by-meeting approach. “We are not on any preset course,” he said, highlighting adaptability in future decisions.
He also noted broad support among FOMC members for more rate cuts this year, with 19 participants expecting multiple cuts, signaling a strong consensus for further easing to balance inflation and growth.
Share this article
