Powell Signals Cautious Stance on Future Fed Rate Cuts

Federal Reserve Chair Jerome Powell, speaking at a Greater Providence Chamber of Commerce luncheon on Tuesday, signaled a cautious approach to future interest rate cuts after the central bank trimmed its key policy rate by 25 basis points last week. Powell said the move was a risk management step to guard against rising downside risks to employment while inflation remains above the Fed's 2 percent target, and he gave no clear signal that additional cuts are imminent.

Powell framed the recent decision as reflecting a changed balance of risks, with labor-market weakness now a greater threat than it was while the risk of persistently high inflation has eased somewhat. "If we were to cut too aggressively, we could leave the inflation job unfinished and need to reverse course later," he said, adding that keeping rates too high for too long could also unnecessarily soften the labor market. He reiterated that the Fed is not on a preset course and that future policy moves will depend heavily on incoming data, inflation dynamics, labor-market developments, and external risks.

The benchmark federal funds rate now stands near 4.1 percent, down from roughly 4.3 percent before the cut,...