Fed chair Jerome Powell holds press conference after interest rate cut – business live

Powell responded to a question about accusations that an interest rate two months before the election as political motivations, something that Donald Trump has suggested over the last few months.

“This is my fourth presidential election at the Fed and it’s always the same. We’re going into this meeting in particular and asking what the right thing to do for the people we serve. And we do that and we make a decision as a group and then we announce it. That’s always what it is, it is never about anything else,” Powell said.

He also noted that “the things that we do really affect economic conditions, for the most part, with a lag.”

In other words, much of the impacts of this rate cut won’t even be felt until after the election.

Powell is fielding multiple questions about the labor market. One reporter asked why why the Fed thinks the labor market will stabilize around 4.4% when historically, the unemployment rate continues to rise if it goes up at that pace.

“The labor market is in solid condition and our intention with our policy today is to keep it there. You can say that with the whole economy. The US economy is in a good shape. It’s growing at a solid pace, inflation is coming down, the labor market is at a strong place. We want to keep it there. That’s what we’re doing,” he said.

Another reporter asked if Fed officials were too late in cutting rates with rising layoffs. Powell ended up taking a defensive stance, saying that officials are seeing a strong labor market that has cooled from an overheated period.

“The level of conditions is pretty close to what I would call maximum employment,” Powell said. “We’re not seeing rising claims, we’re not seeing rising layoffs and we’re not hearing that from companies.”

When asked whether it seems like there will be another rate cut in the future, Fed chair Jerome Powell said a pretty standard response: “We’re going to be making decision meeting by meeting based on the incoming data, the evolving outlook and the balance of risks.”

But Powell pointed out that the Fed’s economic projections after this meeting point to a “process of recalibrating our policy stance away from where we had it a year ago when inflation was high, unemployment low, to a place that’s more appropriate,” he said.

“There’s nothing to suggest the committee is in a rush,” he added, suggesting officials are still taking a cautious approach. Powell also noted that all 19 Fed officials behind the Fed’s economic projections indicated they expect there to be multiple rate cuts this year.

Fed chair Jerome Powell is delivering remarks right now about the half-point rate cut. Powell suggests, essentially, that the Fed is working toward a so-called “soft-landing” – bringing inflation down without hurting the jobs market.

“This decision reflects our growing confidence that within appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2,%” Powell said.

Powell said that the labor market has “cooled from its formerly overheated state” and inflation has “eased substantially” – a marked difference in tone from press conferences over the last year, where Powell mostly spoke on concerns about price increases.

The Federal Reserve just announced that it’s cutting rates by a half-point, bringing rates down to 4.75% to 5%.

“The committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the Fed’s Open Market Committee said in a statement.

This is the first time the Fed has cut rates since the start of the pandemic, when it dropped rates to zero.

Fed chair is expected to hold a press conference about the rate cut at 2:30 pm ET. Stay tuned.

A Harris poll for The Guardian earlier this year – which found almost three in five Americans wrongly believed the US was in recession – underlined the gap between how the world’s largest economy is doing, and how people think it’s doing.

“If you stopped the average person in the street, they would have no idea” how many jobs had been created, or how many people were out of work, in any given month, Stephanie Kelton, a professor of economics and public policy at Stony Brook University, noted recently.

Ahead of the US presidential election, voters consistently rank the economy as a top issue. But even those who do follow the latest official data reports are unlikely to base their decision in November on their contents.

An interest rate cut might be different. “Perhaps at the margin, in the tiniest of ways”, it could make some people start to feel better about the economy, Kelton suggested. “Maybe there’s a little bit of a vibe shift in having the rate-cutting cycle begin, and knowing it’s under way.”

The most recent official inflation and employment releases broadly reinforced confidence that the Fed would cut rates today.

• The latest consumer price index, released last week, showed that price growth softened in August to its lowest level since February 2021.

• The latest jobs report underlined how the labor market’s growth has slowed this year, 142,000 jobs in August.

Policymakers will have carefully scrutinized both these reports ahead of the decision.

Ahead of the Fed’s announcement, it’s worth noting why Wall Street is so confident that this time around – having kept rates on hold at the past eight consecutive meetings – it will finally act.

Jerome Powell, the central bank’s chair, all but declared last month it would cut rates when policymakers convened for their September meeting.

“The time has come for policy to adjust,” he told an annual symposium for central bankers at Jackson Hole in Wyoming.

While Powell added that the “timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks”, he said: “The direction of travel is clear.”

Many investors have heard enough. Money markets currently put the chances of a 50 basis-point cut at 55%, according to CME’s FedWatch tool.