Powell Star Fed can move more slowly

The economy is strong, and it’s stronger than we thought it was going to be, which means the Fed can move more slowly in reducing borrowing costs.

“The good news is that we can afford to be a little more cautious as we try to find” a rate-setting that neither spurs nor slows growth, Powell said.

Officials are trying to set rates closer to a so-called neutral level that neither spurs nor slows growth.

They aren’t sure where that is, but most think it is likely below 4%.

Wall Street Journal 4 December 2024

“As is often the case, we are navigating by the stars under cloudy skies.”

In practice, policymakers try to feel their way to neutral by moving slowly.

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