WASHINGTON -- Chair Jerome Powell said Thursday that the Federal Reserve will likely cut its key interest rate slowly and deliberately in the coming months, in part because inflation shows signs of persistence and the Fed's officials want to see where it heads next.
Powell, speaking in Dallas, said inflation is edging closer to the central bank's 2% target, "but it is not there yet."
At the same time, he said, the economy is strong, and the policymakers can take time to monitor the path of inflation.
Economists expect the Fed to announce another quarter-point rate cut in December, after a quarter-point reduction last week and half-point cut in September.
The Fed's steps after that are much less clear. In September, the central bank's officials collectively indicated they envisioned cutting their key rate four times in 2025. Wall Street traders, though, now expect just two rate reductions, according to futures pricing tracked by CME FedWatch.
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After Powell's cautious remarks Thursday, traders estimated the likelihood of a Fed rate cut in December at just below 59%, down from 83% a day earlier.
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