Powell: Fed Doesn't Need 2% Inflation Before Interest Rate Cuts

IconCryptoNewsTerminal Staff10 Jul, 2024

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Powell: Fed Doesn't Need 2% Inflation Before Interest Rate Cuts

Federal Reserve Chairman Jerome Powell indicated that the central bank may cut interest rates before inflation falls below 2%. Previously, Powell had stated that the Fed would not consider rate cuts until inflation returned to 2%. However, he now believes that the Fed can be more flexible in its approach to monetary policy. Powell's comments suggest that the Fed is becoming more concerned about the impact of rising interest rates on the economy. The Fed has raised interest rates several times in recent months in an effort to combat inflation. However, these rate hikes have also slowed economic growth. The Fed's decision to consider rate cuts before inflation falls below 2% is a sign that the central bank is taking a more balanced approach to monetary policy. The Fed is now weighing the risks of inflation against the risks of slowing economic growth. Powell's comments were welcomed by financial markets. Stock prices rose on the news, as investors cheered the prospect of lower interest rates.

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