Federal Reserve Chair Jerome Powell underscored the resilience of the U.S. economy, stating that while he remains noncommittal on a December rate cut, he sees no imminent election-driven shift in policy. Powell further emphasized that he wouldn’t consider stepping aside if pressured by President Trump, signaling his firm commitment to the Fed’s independence. In remarks aimed at reinforcing market confidence, Powell highlighted that the U.S. economy stands on solid ground, with sustained labor market strength and a broadly stable economic outlook.
When pressed on the likelihood of another rate cut in December, Powell refrained from providing specifics, maintaining a stance that leaves room for future action but avoids hinting at a particular direction. This cautious approach aligns with the Fed’s evolving stance in recent months, where officials now appear more assured of the labor market’s stability than they did earlier in the year. The dollar index saw modest gains in Asian trading after a sharp 0.8% dip on Thursday, marking its steepest drop since August. Should the U.S. opt to contain inflation through higher interest rates, the yen could face further pressure against the dollar, amplifying potential currency market volatility.
The Fed’s latest decision saw officials unanimously lower the federal funds rate by 25 basis points, while adjusting their language to reflect a shift in their economic assessment. The central bank noted that “labor market conditions have generally eased” and that “the unemployment rate has moved up but remains low.” Notably, the statement also modified its inflation outlook, acknowledging that inflation “has made progress toward the committee’s 2% objective but remains somewhat elevated,” omitting previous references to needing “further” progress. This more tempered language reflects the Fed’s growing comfort with current economic conditions, even as inflation remains above target.