Fed Chair Powell’s Allies Signal Possible December Rate Cut
Allies of Federal Reserve Chair Jerome Powell have created a favorable environment for a potential rate cut at the Fed's December meeting, despite a divided committee.
Background
The Federal Reserve’s policy-setting committee exhibits varied opinions about the next moves on interest rates. Supporters close to Chair Powell emphasize that economic data may soon justify easing monetary policy.
Potential for Rate Cut
These allies suggest that recent signs of slowing inflation and weaker economic growth could open the door for a rate cut to stimulate the economy. They argue that such action would help avoid harming the labor market while maintaining overall financial stability.
Committee Division
However, the Fed remains split, with some policymakers urging caution and preferring to hold rates steady or even consider tightening further if inflation risks persist.
“There is growing recognition among the committee that a more accommodative stance might be needed if inflation data softens further,” said one source close to Powell.
This nuanced stance reflects the balancing act Powell must perform between curbing inflation and supporting growth.
Federal Reserve allies are preparing the ground to allow Powell a rate cut in December, despite internal disagreements, reflecting concerns about slowing inflation and economic momentum.
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