By Howard Schneider
NASHVILLE, Tennessee (Reuters) -The U.S. economy appears poised for a continued downturn in inflation that will permit the Federal Reserve to cut its standard interest rate and “over time” reach a level that is no longer holding back activity, Fed Chair Jerome Powell stated on Monday in remarks that revealed no apparent lean towards a muchfaster or slower rate of decreases in loaning expenses.
“Disinflation hasactually been broad-based, and current information show evenmore development towards a sustained return to 2%,” the Fed’s targeted inflation level, Powell stated in remarks to a National Association for Business Economics conference in Nashville, Tennessee.
“If the economy develops broadly as anticipated, policy will relocation over time towards a more neutral position,” Powell stated. “But we are not on any pre-programmed course. The threats are two-sided, and we will continue to make our choices conference by conference.”
The Fed cut rates by half a portion point at its Sept. 17-18 conference, lowering the variety of its policy rate from a 20-year high of 5.25%-5.50%, which it had preserved for 14 months, to the existing 4.75%-5.00% variety. Economic forecasts launched at that conference revealed the average policymaker expectation was for the rate to decrease additional to the 4.25%-4.50% variety by the end of the year, to the 3.25%-3.50% variety by the end of 2025, and for policy reducing to end in 2026 with the rate around the longer-run approximated “neutral” l