Fed Plans Two More Rate Cuts In 2024 If The US Economy Meets Expectations, Says Powell

WASHINGTON, Oct 1 (Bernama-Sputnik) -- The Federal Reserve will do two more rate cuts before the end of the year, in follow-through to September’s 50-basis point snip, if the US economy “performs as expected," the central bank’s chairman Jerome Powell said Monday, reported Sputnik.

“It’ll depend on the data but, ultimately, that's what the baseline is — if the economy performs as expected, that would mean two more cuts this year, a total of 50 (basis points) more,” Powell told a business seminar in the US capital.

The US economy grew 3 per cent per annum in the second quarter of 2024, unchanged from the previous quarter and a notch above Wall Street’s 2.9 per cent projection, the Commerce Department reported last week.

The Fed cut US interest rates on September 18 for the first time in four years, dropping 50 basis points to bring the peak rate Americans pay for their borrowings to 5 per cent. Before that, rates topped off at a two-decade high of 5.5 per cent due to inflation on a tear from the trillions of dollars of relief spending and the breakdown of supply chains caused by the coronavirus pandemic.

The Fed has signalled that it is open to cutting another 50 to 100 basis points from rates before the year-end if inflation continues to decline and the job market remains in peril.

Inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, grew by 2.2 per cent per annum in August, expanding at its slowest pace since February 2021.

The Fed’s Summary of Economic Projections, meanwhile, showed that the forecast for unemployment among Americans had been raised to 4.4 per cent this year, from a previous 4 per cent. The United States added just 142,000 non-farm payrolls in August, some 23,000 jobs below Wall Street estimates. In comparison, non-farm payrolls grew by 315,000 in April.

--BERNAMA-SPUTNIK