Central Bank Leader Hints at Future Rate Reductions Amid Economic Growth
In a recent interview, the President of the Federal Reserve Bank of New York, John Williams, suggested that the central bank may need to lower interest rates again in the future, following the significant half-percentage-point rate cut in September. This statement comes on the heels of Federal Reserve Chair Jerome Powell’s indication that the bank would likely stick to smaller, quarter-percentage-point rate cuts.
Williams, a permanent voting member of the Federal Open Market Committee, echoed Powell’s sentiments, stating that the September rate cut was not a precedent for future actions. Instead, he expressed his personal expectation that interest rates would need to be reduced over time.
Currently, Williams believes that monetary policy is well-positioned to support the economy, which is expected to continue growing, with inflation returning to 2%. This optimism is fueled by recent government data, which revealed a surprisingly strong job market, contradicting concerns about labor sector weakness.
As a result, traders are now anticipating a quarter-point rate cut next month, with an 87% probability, according to market predictions. Any possibility of a larger, half-point cut has been ruled out.
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