Fed Chair Powell says further rate cut at December meeting not ‘a foregone conclusion’

By Mucahithan Avcioglu

ISTANBUL (AA) – The US Federal Reserve Chair Jerome Powell expressed doubts Wednesday for a further policy rate cut at the central bank’s December meeting, contrary to market expectations, saying it “is not a foregone conclusion, far from it.”

“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it,” Powell said at a press conference after the central bank’s policy meeting.

While there is still a blackout for government data releases due to the ongoing federal government shutdown, Powell said the central bank will continue to obtain some economic information from sources other than government data. However, Powell added that high uncertainty could influence the outcome of the December meeting.

“We get some data on inflation, some data on economic activity. We’ll have a picture of what’s going on. We also will have the Beige Book,” Powell said.

“I would say we’re not going to be able to have the detailed feel of things. But I think if there were a significant or material change in the economy one way or another, I think we’d pick that up through this,” he noted.

The Fed cut the federal funds rate by 25 basis points to a range of 3.75% to 4% on Wednesday, matching expectations and signaling downside risks to employment.

– Available data points to softer labor market

Powell also stated that the “available evidence” showed “a somewhat” softer labor market, as the government shutdown caused a four-week economic data blackout.

“Although official employment data for September are delayed, available evidence suggests that both layoffs and hiring remain low, and that both households’ perceptions of job availability and firms’ perceptions of hiring difficulty continue to decline in this less dynamic and somewhat softer labor market,” Powell said. “The downside risks to employment appear to have risen in recent months.”

Before the shutdown, US non-farm payrolls increased by 22,000 jobs in August, below expectations, while the unemployment rate ticked up one-tenth of a percentage point to 4.3%.

In September, the private sector employment, meanwhile, fell by 32,000 jobs, contrary to expectations for an increase.

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