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.
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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