The Federal Reserve held interest rates steady on Wednesday but U.S. central bank chief Jerome Powell said policymakers may be ready to reduce borrowing costs as soon as their next meeting in September, with recent data adding to their confidence that inflation is coming into line with their 2 percent target.
Powell’s remarks at his press conference following the end of the Fed’s latest two-day policy meeting appeared as an affirmation of a coming pivot in September that was partly reflected in the central bank’s new policy statement.
“There has been some further progress toward the Committee’s 2 percent objective,” the policy-setting Federal Open Market Committee said in the statement after deciding to keep the central bank’s benchmark overnight interest rate in the 5.25 percent-5.50 percent 한국을 range.
Powell went further, telling reporters “there is a growing sense of confidence that you could move at the next meeting” as long as coming inflation data affirms its recent softening trend.
The central bank uses the personal consumption expenditures price index for its 2 percent annual inflation target. The PCE price index rose 2.5 percent in June after exceeding 7 percent in 2022, and the month-to-month readings recently have shown it even closer to target.
Investors saw Powell’s comments as clearly setting the stage for a reduction in borrowing costs at the Fed’s Sept. 17-18 meeting, just seven weeks shy of the Nov. 5 U.S. elections.
“Listening to him speak, it’s clear they’re all locked and loaded for September rate cut and they’re going to maintain their optionality,” said Mark Malek, chief investment officer at SiebertNXT.