Inflation fight to Sept rate cuts: Key takeaways from US Fed meeting

On July 31, 2024, US Federal Reserve Chair Jerome Powell held a press conference following the Federal Open Market Committee’s (FOMC) decision to keep interest rates unchanged. Here are the crucial insights from Powell's address:

1. Potential rate cuts on the horizon
Jerome Powell hinted that a rate cut could be imminent, stating, "A reduction in our policy rate could be on the table as soon as the next meeting in September." This remark reflects the Fed’s ongoing discussions about easing monetary policy. Powell added, "We’re getting closer to the point at which it'll be appropriate to reduce our policy rate, but we’re not quite at that point." While the Fed maintained the current rates, this statement sets the stage for potential changes in the near future.

2. Inflation progresses towards 2%
The Fed acknowledged "some further progress" toward its 2 percent inflation target. Powell noted a shift from the previous statement’s "modest further progress" to describe inflation as "somewhat elevated." This change indicates improved inflation control while also underscoring the need for continued vigilance.

Also Read | Fed hints at September rate cut; How will Indian markets react? 

3. Job market back to pandemic eve Powell said that the job market is "back to where it was on the eve of the pandemic." He noted that, with the job market returning to pre-pandemic conditions, further cooling might raise concerns for the Fed. He referred to the slower momentum as an "ongoing gradual normalisation," given that the labor market had previously surged following the pandemic-induced recession in 2020.