Federal reserves have the responsibility of maintaining the inflation rate when the economy is booming, and Jeremy Powell is likely going to do it. Recently when asked about the Fed’s decision on the current economic situation Jeremy Powell the chairman of the Fed, said that they are looking forward to maintaining the goal of the inflation rate at two percent. Feds have previously cut the rate of interest when the country’s on the verge of facing another great recession. However, reports are in favor of the economy; everyone is expecting steady growth for the next few months.
The US economy is likely going to surpass the benchmark of a 2% growth rate, and if that happens, then fed might have to take required actions. There were previously some reports from analysts that said that the Fed might cut the rate of interest again to support the growing economy. However, now, since Jeremy Powell said they are looking forward to maintaining a recession of at least 2 percent, it might not happen. Fed will not increase the rate of interest to keep the inflation, but rather it would remain unchanged.
While describing the current situation, Jeremy Powell mentioned about the current labor market and increasing wage rates. The rage of unemployed persons has diminished from last few months, which is an indication that the country is witnessing a good phase of economy. Since Trump started a trade war with China, many things have changed, and the Feds were forced to reduce the rate of interest in previous quarters. However, now, the situation is under control, and the government managed to outlast everyone’s expectations. There are still fewer chances that the Fed might go on to increase rates, and that would happen if economy keeps booming at this rate.