Fed Chairman Powell: The strength of the economy influences interest rate decisions.

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Federal Reserve (Fed) Chairman Jerome Powell stated that he has not given any signals that there is a need to rush to lower interest rates, and that the strength observed in the economy allows the bank to take its decisions carefully.

INFLATION TARGET OF 2%

Powell made assessments regarding the economic outlook at an event held in Dallas. He recalled that they reduced the policy interest rate by 25 basis points last week and took another step to reduce the degree of policy restriction, considering the progress made in bringing inflation down to target and the cooling in the labor market. He expressed that they believe the strength in the economy and the labor market can be maintained through an appropriately recalibrated policy stance, and that inflation can sustainably decrease to 2%.

Powell stated that they will bring the policy to a more neutral level over time, but noted that the path to reach that level has not been predetermined.

"NO NEED TO RUSH FOR INTEREST RATE CUT"

Emphasizing that they will carefully evaluate incoming data, the evolving outlook, and the balance of risks while considering additional adjustments to interest rates, Powell said, "The economy is not giving us any signals that we need to rush to lower interest rates. The strength we see in the economy right now allows us to approach our decisions carefully."

Powell conveyed that the trajectory of the policy interest rate will depend on how incoming data and the economic outlook develop.

"WE ARE DETERMINED TO MAINTAIN THE STRENGTH OF OUR ECONOMY BY RETURNING INFLATION TO OUR TARGET"

Powell stated that they aim to bring inflation down to the targeted level without the increase in unemployment that often accompanies efforts to reduce high inflation in the past, saying, "Although the task is not yet complete, we have made significant progress towards achieving this outcome."

He explained that the economy has made significant progress towards maximum employment and price stability goals, and that the labor market continues to remain strong.

Powell noted that inflation has significantly retreated from its peak and that they believe it is on a sustainable path towards the 2% target, stating, "We are determined to maintain the strength of our economy by returning inflation to our target while supporting maximum employment."

UNEXPECTED INCREASE IN PRICES

Powell emphasized that the labor market has cooled to the point where it is no longer a significant source of inflationary pressure, and that inflation is now much closer to the long-term 2% target, but that they are not there yet. Powell stated, "We are determined to finish the job."

Fed Chairman Powell noted that although inflation may fluctuate from time to time, he expects it to continue to move towards the 2% target.

Referring to the data released today regarding producer inflation in the U.S., Powell mentioned that the data showed a slightly higher increase than they had expected.

He stated that he still believes the overall trend is solid and that they will evaluate more data until the meeting in December, saying, "If the economy weakens, we have plenty of room to lower interest rates."

"IT'S EARLY TO ASSESS THE IMPACT OF TRUMP'S POLICIES"

In response to a question about the Fed's independence, Powell emphasized that they do not consider the welfare of any political party when making decisions.

Powell underscored that they make decisions based on macroeconomic data, stating that independent central banks have done a better job in combating inflation.

Powell expressed that it is still early to predict the impact of the policies that President-elect Donald Trump will implement, saying, "We know that policies in a few areas will change. We do not know how much they will change. We do not know over what time frame they will change. When it comes to fiscal policy, passing a bill through Congress takes quite a long time. I think we will be cautious about changing policy until we have more certainty."