US economy slowing, no decision made on Sept. meeting: Powell

Federal Reserve Chair Jerome Powell said, on July 30, that the likelihood of an interest rate cut in September will depend on the upcoming economic data on employment and inflation.

“We are awaiting two full sets of data before the September meeting,” he told a press conference. However, no decision has been made regarding what will happen at that meeting, he said.

Powell said that the Fed does not pre-commit and will consider all information available.

The US economic growth slowed to 1.2% in the first half of the year, compared to 2.5% during the same period last year.

The Fed is well-positioned to respond to potential developments, Powell said, adding that the slowdown largely reflects weaker consumer spending.

The current policy rate is “moderately restrictive”, the Fed Chair said, asserting that a moderately restrictive policy remains appropriate given the economy’s resilience.

The economy does not appear to be unduly affected by restrictive policy, Powell stated.

“We will closely monitor the labor market for any signs of future weakness. There are also downside risks to the labor market.”

Although objecting members justified their stance for a rate cut, Powell said everyone deliberated carefully and presented their perspectives.

“All members seek to think clearly and express their views, which is exactly what happened.”

President Donald Trump’s visit to the Fed headquarters was “pleasant”, Powell revealed.

“It was an honor to host him as such visits are rare at the Fed.”

The impact of tariffs on prices is beginning to emerge. However, the overall impact on the economy and inflation remains unclear.

The baseline view suggests a short-term impact on inflation, Powell said, adding rates may remain on hold until the inflation impact is clearer.

Tariff imposition could cause more persistent inflationary effects, the Fed Chair said.

“Our mandate is to prevent any increase in prices from becoming a sustained problem,” he stated.