The President of the American Central Bank (Fed), Jerome Powell, praised the performance of the American economy on Thursday, even judging that its strength “far” surpassed that of other major world economies.
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“The recent performance of our economy has been remarkably good, by far the best of all the major economies in the world,” underlined the president of the institution, during a speech in Dallas, Texas.
GDP growth almost twice as high as in the euro zone, unemployment rate still low, and inflation which has fallen drastically: the health of the American economy remains very good, having simply cooled after a period of overheating.
“The economy is not sending any signals that we need to rush to lower rates,” he said, adding that “the current strength of the economy gives us the opportunity to approach our decisions with caution” .
Jerome Powell.
AFP
The US Federal Reserve lowered its rates on November 7, for the second time in a row. They are now in the range of 4.50 to 4.75%.
The next Fed meeting will take place on December 17 and 18, and a further cut of a quarter point is expected by market participants, according to the CME Group tool.
“Inflation is getting much closer to our long-term target of 2%, but it’s not there yet. We are committed to finishing the job,” said Jerome Powell.
“I expect inflation to continue to fall towards our 2% target, although on a sometimes bumpy path,” he added.
Inflation also rebounded in October, for the first time since March, to +2.6% in one year against +2.4% in September, according to the CPI index.
As for employment, the labor shortage is decreasing, and the unemployment rate remains very low, at 4.1%.
“The labor market has cooled to the point where it is no longer a source of significant inflationary pressures,” welcomed Jerome Powell.
The Fed was on the front line to bring down inflation which has eaten away at the purchasing power of American consumers since 2021.
For this, it had raised its rates gradually, in order to increase the cost of credit to weigh on demand and, in fineease the pressure on prices. But the counterbalance to these measures risks being too strong an increase in unemployment, which the Fed wants to avoid at all costs.
