“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in a speech to business leaders in Dallas. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
Powell emphasized that policymakers still view inflation as being “on a sustainable path to 2%,” allowing the U.S. central bank to adjust monetary policy gradually without aiming to slow down the economy.
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However, the exact neutral rate in the current environment, and how quickly the Fed might try to reach it, remains uncertain. This is particularly true as central bankers assess the ongoing strength of the economy and the potential impact of policies from the incoming Trump administration—ranging from higher tariffs to reduced immigrant labor—that could affect economic growth and inflation.In response to Powell’s remarks, Indian IT stocks saw declines of up to 5%. LTIMindtree and Wipro dropped nearly 5%, while Tech Mahindra, Infosys, LTTS, TCS, and HCL Tech fell by 2-4%.
Indian IT stock prices are particularly sensitive to U.S. market movements, as a significant portion of their revenue is derived from the U.S.
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As of now, Powell stated that the economy is not showing signs of distress that would prompt the Fed to accelerate rate cuts. Conversely, “if the data let us go a little slower, that seems like a smart thing to do.”
“The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully,” Powell reiterated in prepared remarks at a Dallas Fed event.
(With inputs from agencies)
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