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Following Decision to Not Change Rates, Fed Chair Weighs In on 4 Key Economic Issues

WASHINGTON–With the Fed having opted to leave rates unchanged at its just-completed September meeting, Chairman Jerome Powel has offered some signals on how the central bank views a number of critical issues and for what might lie ahead.

Powell Jerome

Jerome Powell

As CUToday.info reported, the Fed  has left the target range for the federal funds rate at 5.25% and 5.50%. Some forecasters believe the Fed will raise rates once more this year—with the Fed itself indicating that is likely--while NAFCU Economist Noah Yosif predicted there will be “no further hikes in this cycle, with a rate cut arriving around the middle of next year.”

Four Key Issues

During a press conference held following adjournment of the meeting, Powell, along with a statement issued by the Fed, touched on four key themes, including:

  • Interest Rates. Powell made clear that as long as the economy is growing at a healthy pace, it would be premature to cut interest rates. By a 12-7 margin, Fed policymakers also expect to raise rates again, most likely this year.
  • Unemployment. Members of the Fed believe the current strong labor market will last into 2025, which could pose a challenge for efforts to fight inflation, especially if strong hiring leads to big wage increases.
  • Inflation. During his remarks Powell said progress has been made, but again stressed there is a “long way to go” to bring inflation down to the central bank’s 2% target.
  • Growth. The Fed is most optimistic when it comes to economic growth, forecasting Q4 GDP growth at 2.1% on an annualized basis, up from 1% at its June meeting. In addition, the Fed has boosted its 2024 GDP expectations.

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