Federal Reserve Chairman Jerome Powell announced on Thursday that the institution will likely reduce its key interest rate gradually in the coming months. This decision is based on the persistence of inflation and the need to monitor its evolution. Powell mentioned that the economy is showing strength, allowing Fed officials to take their time to assess the situation.
Powell emphasized that although inflation is approaching the 2% target set by the Fed, it has not yet reached that level. Despite this proximity, the entity expects to maintain a cautious stance. The Fed chairman stressed that the economy is not showing urgent signals to lower rates, which allows for careful consideration of monetary policy decisions.
Analysts expect the Fed to announce another quarter-point cut in December, following previous reductions in September and last week. Nonetheless, the next steps of the Federal Reserve are not clearly defined, as Wall Street traders are anticipating only two reductions, according to futures tracked by CME FedWatch.
Donald Trump's victory in the presidential elections has influenced Treasury yield rates, while officials at the institution had previously anticipated cutting their key rate four times in 2025 in September. Powell reiterated that inflation is expected to decrease even further in the future, although the path may present ups and downs.
