Federal Reserve Officials Say They’re in ‘Good Place’ to Respond to Economic Changes | Global News Avenue

The Federal Reserve is likely to lower borrowing costs further in December, with officials saying this week that the central bank is prepared for any potential changes in the economy.

Federal Reserve officials last week cut their benchmark interest rate by a quarter of a percentage point. Economists expect the central bank to continue cutting interest rates for the foreseeable future as long as inflation is under control and the job market is resilient. In speeches this week, Fed officials seemed to agree.

Tom Barkin, president of the Federal Reserve Bank of Richmond, said at a conference: “Because the economy is now in good shape and interest rates are off recent peaks but also off historic lows, no matter how the economy develops, the Fed are able to respond appropriately,” Tuesday’s event in Baltimore. “After the challenges of the past few years, this is a great place to be.”

Inflation concerns may not slow rate-cutting cycle

Federal Reserve officials have Another quarter percentage point rate cut expected At the next meeting in December, Minneapolis Fed President Neel Kashkari said things may still be going as planned.

“There would have to be a surprise on the inflation front for the outlook to change that dramatically,” Kashkari said at a Yahoo Finance event on Tuesday.

Kashkari’s comments were previously posted Consumer Price Index (CPI) released on WednesdayData showed annual inflation in October was 2.6%, as economists expected.

Voters see inflation as One of their biggest concerns When supporting President-elect Donald Trump. Some economists say his policies May exacerbate inflationary trendsalthough Fed officials said they have not yet considered these factors.

“We at the Fed will just have to wait and see what Congress and the executive branch decide to do. And then we will model that into our analysis of the economy, its potential and the outlook for the labor market and inflation,” Kashkari said.

Interest rates are likely to remain high

Although more Interest rate cuts may be a prospectIt’s unclear how many times the Federal Open Market Committee (FOMC) will take action to lower the federal funds rate.

The goal of central bankers is to achieve an economic equilibrium in which price pressures are under control and the labor market is fully employed. Some economists believe the Fed may cut rates a few more times before reaching that level, Often referred to as the “neutral interest rate”“.

However, Dallas Fed President Lori Logan said more caution may be needed.

“However, when I look at the available evidence, I see clear signs that the neutral rate has increased in recent years, and there are some signs that the neutral rate may be very close to where the federal funds rate is now,” Logan said on Wednesday. “If we cut rates too far beyond neutral, inflation could accelerate and the FOMC may need to change course.”