The Zhitong Finance App learned that while attending the New York Times DealBook summit, Federal Reserve Chairman Powell delivered his public speech before the last interest rate decision meeting of the year. The interview provided investors with an opportunity to learn more about their policy views, while kicking off the upcoming Federal Open Market Committee (FOMC) meeting to be held on December 17-18.

Powell emphasized once again that due to uncertain inflation prospects and steady current economic performance, the Federal Reserve has no sense of urgency to cut interest rates rapidly. He said that the current economic situation is strong, the downside risk in the job market is less, economic growth is stronger than expected, and inflation is slightly higher than previously estimated. Powell pointed out that the Federal Reserve could take a more cautious approach and look for a “neutral interest rate” — that is, a level of interest that neither stimulates nor limits economic activity.

Since September, the Federal Reserve has cut interest rates by 0.75 percentage points. Currently, the federal funds rate target range is 4.5% to 4.75%. Despite this, Powell said, “The economy is not sending a signal that it needs to cut interest rates urgently. The current strong performance of the economy allows us to make decisions more carefully.”

When asked about the relationship between the Federal Reserve and the government, Powell stressed that the Federal Reserve, as a “product of Congress,” is not part of the US Constitution, but an institution established by law. He said, “This gives us the ability to serve the interests of all Americans rather than any particular political party or outcome. Our mission is to achieve maximum employment and price stability, and stay completely free from politics.” He made it clear that monetary policy will not be adjusted due to the cost of government debt, but will focus on employment and inflation targets.

Faced with questions about Treasury Secretary nominee Scott Bessent's suggestion that the president announce Powell's successor early, Powell denied it. He said that the Federal Reserve has a stable institutionalized relationship with previous governments, and he looks forward to maintaining this relationship in the future.

Powell mentioned that although the level of inflation is still far from the Fed's long-term target of 2%, the trend is improving. He expects inflation to continue closer to target, but this path is likely to be full of fluctuations. According to the latest forecast, the consumer price index (CPI) is expected to rise 2.6% year on year in November, and core inflation (excluding food and energy) is expected to rise 3.3%.

In terms of the job market, economists forecast 0.215 million new jobs in November, and the unemployment rate is expected to remain at 4.1%. If employment data or inflation data exceeds expectations, the Federal Reserve may adjust the pace of cutting interest rates.

Powell warned that the growth path of the US federal budget deficit is unsustainable, even though the current level of debt has not reached crisis levels. He stressed that the US needs economic growth to exceed the debt growth rate, but it has not achieved this goal so far. Powell urged that the budget deficit be resolved as soon as possible to ensure long-term economic stability.

Federal Reserve officials will update their quarterly economic forecasts at the December meeting, including the interest rate policy path for 2025 and beyond. According to the September forecast, the median forecast shows that interest rates will be cut by 1 percentage point in 2024 and another 1 percentage point in 2025. Powell said that decisions will be based on the latest data and economic trends to create conditions for the long-term stability of the US economy as much as possible.