Everyone is currently feeling the pinch of the declining economy which is currently termed as ‘economic slowdown’ and not ‘recession’. However, there are fears that a recession might hit the markets if the same situation carries on. However, Chairman of the Federal Reserve released a note regarding the state of the US’ economy in a prepared statement. Jerome Powell said, CNBC reports, that the condition of the US economy at the moment is solid. He also said that US’ central bank must do what it can in order to keep the economy solid.
Powell added that “While not everyone fully shares economic opportunities and the economy faces some risks, overall it is— as I like to say— in a good place,” “Our job is to keep it there as long as possible.”. This statement from Jerome Powell came at an event called “Fed Listens” in Washington where monetary policy communication review took place. However, the Federal Reserve chairman’s comments come at a time when the data does not share the same feelings. It is revealed that U.S. manufacturing contracted to its weakest level in a decade. The U.S. services sector grew at its slowest pace since August 2016. The Labor Department also reported weaker-than-expected jobs growth for September.
Powell added that “While we believe our strategy and tools have been and remain effective, the U.S. economy, like other advanced economies around the world, is facing some longer-term challenges—from low growth, low inflation, and low-interest rates,”. He also revealed that they are “examining strategies” to achieve its inflation goal of 2%. Fed officials will meet again between Oct. 29 and 30 and they might cut the rates once again. Market expectations for a rate cut later this month are around 80%. However, the Fed has already cut the rates twice because the inflation rate remains lower than the bank’s target.