Fed’s Powell says ‘time has come’ to cut interest rates

Powell’s comments are as close as he is likely to come to declaring victory over the outbreak of inflation that rattled the economy at the start of the pandemic.
The fast rise in prices led the Fed to increase its benchmark policy rate from the near-zero level to the current range, which is the highest in a quarter of a century. It has been held there for more than a year even as the economy defied frequent predictions of recession, inflation fell, and economic growth continued – the makings of a textbook “soft landing,” with the endgame of rate cuts now set to begin.
“While the task is not complete, we have made a good deal of progress” toward restoring price stability, Powell said in his speech. The Fed defines price stability as 2 per cent inflation, as measured by the personal consumption expenditures price index. The index is currently running at an annual rate of 2.5 per cent.
“With an appropriate dialling back of policy restraint, there is good reason to think that the economy will get back to 2 per cent inflation while maintaining a strong labour market,” he said.
Powell spoke at the Jackson Lake Lodge in Wyoming’s Grand Teton National Park to a gathering of central bankers and economists that has become a global platform for officials to shape views of monetary policy and the economy.
Fed officials will provide updated economic projections at their meeting next month that will provide more detail on how they expect the benchmark policy rate to evolve from here.