Powell says Fed will likely cut rates cautiously given persistent inflation pressures

abcnews.go.com:

Chair Jerome Powell says the Federal Reserve will likely cut its key interest rate slowly and deliberately in the coming months, in part because inflation has shown signs of persistence and the Fed’s officials want to see where it heads next

WASHINGTON — Chair Jerome Powell said Thursday that the Federal Reserve will likely cut its key interest rate slowly and deliberately in the coming months, in part because inflation has shown signs of persistence and the Fed's officials want to see where it heads next.

Powell, speaking in Dallas, said that inflation is edging closer to the central bank's 2% target, “but it is not there yet."

At the same time, he said, the economy is strong, and the policymakers can take time to monitor the path of inflation.

“The economy is not sending any signals that we need to be in a hurry to lower rates,” the Fed chair said. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

Economists expect the Fed to announce another quarter-point rate cut in December, after a quarter-point reduction last week and half-point cut in September.

But the Fed's steps after that are much less clear. In September, the central bank's officials collectively signaled that they envisioned cutting their key rate four times in 2025. Wall Street traders, though, now expect just two rate reductions, according to futures pricing tracked by CME FedWatch. And after Powell's cautious remarks Thursday, traders estimated the likelihood of a Fed rate cut in December at just below 59%, down from 83% a day earlier.

The Fed's benchmark interest rate tends to influence borrowing rates across the economy, including for mortgages, auto loans and credit cards. Other