Fed Meeting Today: FOMC Holds Rates Steady, Powell Says Cut in September Is Possible (2024)

Powell: September Rate Cut Is Possible

After the decision, Fed Chair Jerome Powell said, "a reduction in our policy rate could be on the table as soon as the next meeting in September."

That said, he stressed the Federal Open Market Committee has “made no decisions about future meetings.”

Follow our coverage of Powell's news conference below.

If the Federal Reserve does move to lower interest rates at its coming September meeting, it will be an apolitical move, Chair Jerome Powell said Wednesday.

The Federal Open Market Committee’s next rate-setting meeting is Sept. 17-18, just several weeks ahead of the U.S. presidential election in early November.

In responding to a question on whether Powell believes it's possible for the central bank to truly remain apolitical with a September rate cut, the Fed chair said that he "absolutely" does.

“We never use our tools to support or oppose a political party, a politician or any political outcome,” Powell said during Wednesday’s post-meeting news conference. “We are a non-political agency. We don't want to be involved in politics in any way.”

Powell stressed that any shifts in monetary policy will be based on the economic data at hand.

“We're doing our best to understand the economy. We follow academics,” Powell said, noting with a bit of snark that officials also follow the commentators that “bless us with their commentary.”

But Fed officials do not base their approach to address the other factors like the political calendar, Powell emphasized.

“Congress has ordered us to conduct our business in a non-political way at all times.Not just some of the time,” Powell said.

The Fed embarked on its plan to raise interest rates more than a year ago. But the impact of that more restrictive policy hasn’t trickled into the broader economy in full force until the past six months.

The unemployment rate has started ticking up and consumer spending—particularly in categories sensitive to interest rates—has slowed.

The lagged nature of changes in interest-rate policy has prompted concerns that the Fed is already behind in cutting rates.

Powell acknowledged those concerns, noting that while the time was “drawing near” to make that decision, the central bank needed more data before pulling the trigger on lower rates.

“It's a very difficult, challenging judgment, and we don’t want to go too soon, and we want to, don't want to go too late,” Powell said, adding the central bank is feeling good about where rates are going.

Plus, with the policy rate at 5.3%, the Fed still has “a lot of room to respond” to any perceived weakness, Powell said.

“You don't see any reason to think that this economy is either overheating or sharply weakening,” Powell said. “That's just not in the data right now.”

Federal Reserve Jerome Powell said Wednesday that bank officials are very aware of the risks of starting rate cuts too soon and the risk of going too late—and had a robust conversation during this week’s meeting on that very point.

“There was a real discussion back and forth of what the case would be for moving [on rate cuts] at this meeting,” Powell said. “The overall sense of the committee, as I mentioned, is that we're getting closer to the point at which it will be appropriate to begin to dial back restriction. We're not at the point yet. We want to see more good data.”

He reiterated that the decision to keep interest rates steady at this week’s policy meeting was unanimous.

“A strong majority supported not moving at this meeting,” Powell said.

As of now, Powell noted that the U.S. has seen a lot of good inflation data.At the end of last year, Fed officials said they wanted to see more positive data, with several pointing out that too much of the disinflation was coming from goods.

As for 2024, while the first quarter didn’t post “great inflation data,” Powell said the recent progress on inflation is better. So now, he added, it’s about weighing the risks.

“There's no guarantee in this. It's a very difficult judgment call,” Powell said.