Federal Reserve policymakers indicated on Thursday that further interest rate cuts are likely in the coming months, citing signs of cooling inflation and a robust but potentially weakening job market. However, one official suggested that skipping a rate cut in November might be an option.
Data released earlier in the day showed that consumer price inflation fell to 2.4% in September from 2.5% in August, and weekly jobless claims rose unexpectedly. Federal Reserve Bank of Chicago President Austan Goolsbee said that the central bank is aiming to maintain the current economic conditions and that rate cuts will be gradual.
“The vast majority (of Fed policymakers) believes that over the next 12 to 18 months, conditions continue to slowly and gradually improve to something like target, and rates gradually come down a fair amount to something well below where they are today,” Goolsbee said.
Federal Reserve Bank of New York President John Williams emphasized that the timing and pace of rate cuts will depend on economic data but suggested that further cuts are likely. Financial markets are currently pricing in a quarter-point rate cut at the Fed’s November meeting and subsequent meetings.
However, Federal Reserve Bank of Atlanta President Raphael Bostic expressed openness to pausing rate cuts in November, citing his expectation for only one more rate cut this year.
The Fed’s decision to cut rates by a half-point in September was seen as a recalibration of policy to align with slowing inflation and a weakening job market. Policymakers have emphasized that this does not signal a faster pace of future rate cuts.
Economists generally expect the Fed to continue cutting rates in the coming months to support the economy and prevent a recession.
