(Reuters) – The U.S. economy seems poised for a continued slowdown in inflation that will allow the Federal Reserve to cut its benchmark interest rate and “over time” reach a level that is no longer holding back activity, Fed Chair Jerome Powell said on Monday in remarks that showed no obvious lean towards a faster or slower pace of rate reductions.
Powell said in remarks prepared for delivery at a National Association for Business Economics conference in Nashville, Tennessee that the Fed is not on any preset course. “The risks are two-sided, and we will continue to make our decisions meeting by meeting.”
The Fed cut rates by half a percentage point at its Sept. 17-18 meeting, lowering the range of its policy rate from a 20-year high of 5.25%-5.50%, which it had maintained for 14 months, to the current 4.75%-5.00% range.
MARKET REACTION:
STOCKS: The S&P 500 extended a slight loss to -0.15%
BONDS: The yield on benchmark U.S. 10-year notes rose to 3.796%. The 2-year note yield rose to 3.647%.
FOREX: The dollar index extended to a 0.37% gain
COMMENTS:
QUINCY KROSBY, CHIEF GLOBAL STRATEGIST, LPL FINANCIAL, CHARLOTTE, NORTH CAROLINA
“He basically has underscored that the Fed remains data dependent but nonetheless – the way I’m interpreting it – he’s looking toward an economy that remains solid and a labor market that remains solid and inflation coming down. The suggestion is that the Fed – even though there will be a host of new data before the next meeting – appears to be on tap for another rate cut in the November meeting.”