Powell says the pace of rate cuts “is not preset”

Federal Reserve Chair Jerome Powell said on Thursday at an event in Dallas that with the economy growing steadily, a strong job market, and inflation still above the 2% target, there’s no need for the central bank to hurry into cutting interest rates. Instead, he emphasised that they can take their time and make thoughtful decisions.

Key Takeaways

Economy is not sending signals that US central bank needs to be in a hurry to lower interest rates. 
Moving policy over time towards neutral, policy path is not preset  
Says he expects inflation to continue to come down toward the 2% goal, on a 'sometimes bumpy' path.
The Fed is committed to finishing the job on inflation.
Economic strength gives the Fed the ability to approach its decisions carefully.
Total personal consumption expenditures price index likely rose 2.3% in October from year earlier (vs. 2.1% in September); core PCE likely rose 2.8% (vs 2.7% in September).
The Fed expects these rates to continue to fluctuate in recent ranges; watching carefully to be sure they do. 
The labour market is solid, and inflation is on a sustainable path to 2%.
Recent U.S. economic performance has been remarkably good.
The labour market has cooled to a point where it is no longer a source of significant inflationary pressures.
The Fed is closely tracking the gradual decline in housing services inflation, which has yet to fully normalise.

This section below was published as a preview of the "Global Perspectives" event at 18:30GMT

• Remarks from Fed Chair Jerome Powell will heat the US session on Thursday.
• Fed officials maintain the monetary policy path despite the new political scenario.
• Powell’s speech and Fed commentary will likely revolve around Trump’s victory.

Federal Reserve (Fed) Chairman Jerome Powell is due to participate in a panel discussion titled "Global Perspectives" at an event hosted by the Federal Reserve Bank of Dallas this Thursday, and speculative interest eagerly awaits his words.

The Fed had recently delivered as expected, trimming the benchmark interest rate by 25 basis points (bps) in November after cutting it by 50 bps in September. Back then, the Fed established a monetary policy path, which continues as planned.

However, the outcome of the recent United States (US) presidential election has made investors wonder for how long.

Fed policymakers and the Republican victory

The return of former President Donald Trump to the White House has fueled concerns about renewed inflationary pressures, as his platform would move the economy in a sharply different direction. Tax cuts, tariffs on foreign goods, and harsh migration policies are among Trump’s motto.

The Fed, particularly Chairman Jerome Powell, had done their best to clarify the central bank’s independence from the government, but that’s far from enough to grant a smooth continuation of the current monetary policy.

With a Republican Congress behind Trump, things will take an interesting twist next year, and financial markets are not quite sure where that will end.

About Jerome Powell (via Federalreserve.gov)

"Jerome H. Powell first took office as Chair of the Board of Governors of the Federal Reserve System on February 5, 2018, for a four-year term. He was reappointed to the office and sworn in for a second four-year term on May 23, 2022. Mr. Powell also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body. Mr. Powell has served as a member of the Board of Governors since taking office on May 25, 2012, to fill an unexpired term. He was reappointed to the Board and sworn in on June 16, 2014, for a term ending January 31, 2028."