Fed Chair Jerome Powell says current monetary policy stance 'likely to remain appropriate' - CNBC

Federal Reserve Chairman Jerome Powell indicated that future rate cuts are unlikely so long as conditions remain around where they are now.

Speaking shortly after the central bank approved a quarter-point reduction Wednesday, Powell indicated that the "midcycle" adjustment he has been talking about for the past five months is likely at an end.

"We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the state of the economy remains broadly consistent with our outlook," he told reporters at his post-meeting news conference.

The Federal Open Market Committee approved a 25 basis point reduction to a new target range of 1.5% to 1.7%, citing concerns over global growth and low inflation among other things.

But the committee also removed key language from the statement indicating that it would continue to "act as appropriate to sustain the expansion."

In his remarks to the media, Powell described monetary policy as being "in a good place" as "the baseline outlook remains favorable" for the economy.

He repeatedly stressed the phrase "likely to remain appropriate" as well as emphasizing that the current rate will hold as long as "the outlook remains broadly in keeping with our expectations."

Powell did leave room for the Fed to change its mind if conditions should shift for an economy that is growing around a 2% rate with the unemployment rate holding at a 50-year low of 3.5%.

Before returning to rate hikes, he said he would need to see a "really significant" rise in inflation.

"Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Policy is not on a preset course," Powell said.

Wednesday's rate cut is the third of the year, coming after moves in July and September.

Powell teed up the first rate cut by coining the "act as appropriate to sustain the expansion" language in June. The phrase had been included in each subsequent Fed statement before being removed after this week's two-day FOMC meeting.

The cuts have represented an about-face for the Fed, which had been indicating heading into 2019 that two additional rate hikes likely would be appropriate after nine increases since December 2015.

"Overall, we continue to see sustained expansion of economic activity, a strong labor market and inflation near our 2% objective as most likely," Powell said. "Our views about the path of interest rates that will best achieve these outcomes have changed significantly over the past year."

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Fed Chair Jerome Powell says current monetary policy stance 'likely to remain appropriate' - CNBC
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