In a written speech delivered in Dallas on Thursday, Federal Reserve Chairman Jerome Powell stated, “The economy has not signaled any immediate need for rate cuts, and stronger economic conditions allow us to proceed with caution in our decision-making.”

The Federal Reserve began reducing interest rates in September, and last week, it further lowered the policy rate by 25 basis points. Powell and other officials have indicated their willingness to continue easing rates, provided that inflation continues to subside. Powell’s remarks appear to align with the views of several colleagues, who advocate for a gradual approach to rate reductions.

Powell highlighted that U.S. economic output has grown by more than 3%, with the economy expanding at a robust pace of 2.5% thus far this year. Consumer spending remains strong, supported by rising disposable income and robust household balance sheets. Furthermore, improvements in supply conditions have bolstered the economy’s overall strength. The labor force has grown rapidly, and productivity has increased at a rate exceeding the 20-year pre-pandemic average over the past five years, thereby enhancing the economy's productive capacity and enabling rapid growth without leading to overheating.

Concerning inflation, Powell emphasized that although inflation is approaching the Federal Reserve's 2% long-term target, it has yet to reach this goal. He anticipates that inflation will continue to trend toward 2% as long as the labor market remains broadly balanced and inflation expectations remain well-anchored, although occasional volatility may arise. Data released earlier this week revealed that core inflation in the U.S. remained resilient in October, with core CPI rising 0.3% for the third consecutive month.

Powell also addressed the potential economic impact of policies under a possible second term of President Donald Trump. He noted that the Federal Reserve would have time to assess the economic implications of future Trump administration policies before making a response. Markets speculate that a second Trump administration could introduce measures such as new tariffs, large-scale deportations of undocumented immigrants, and tax cuts that exacerbate the fiscal deficit—policies that are viewed as potentially contributing to higher inflation. As a result, the Federal Reserve may delay further rate cuts in response to inflationary risks if Trump were to win re-election.

Finally, Powell stated that the Federal Reserve’s policy path will depend on forthcoming data and the evolving economic landscape, rather than following a predetermined course.