Federal Reserve megaphone: Powell believes interest rates are still tight, or open room for further rate cuts

The latest article by Nick Timiraos, the "Federal Reserve mouthpiece": Federal Reserve Chairperson Jerome Powell said that even after last week's rate cut, he still believes the Fed's interest rate stance is "still slightly tight," which means there is still more room to cut interest rates this year if officials continue to judge the recent weakness in the labor market to outweigh the setbacks in inflation. Powell generally repeated his views in his press conference after last week's rate cut. He emphasized the challenges the Fed faces in achieving its twin goals of maintaining low inflation stability and promoting a healthy labor market. "Risks in both directions mean that there is no risk-free path, that cutting rates too much and too fast could keep inflation close to 3 per cent instead of the Fed's 2 per cent target, and that maintaining a restrictive policy stance for too long could unnecessarily weaken the labour market," Mr. Powell said. Mr. Powell also reiterated his view that slower job growth this summer made last week's policy shift necessary to focus more on the labour market than it did earlier this year. Slightly tighter rate setting puts the Fed in a good position to respond to potential economic developments.