Fed's Powell signals US central bank to continue cutting rates

Jerome Powell, the chair of the Federal Reserve, signalled further room for the central bank to lower borrowing costs this year to shore up the labour market despite the recent re-acceleration in inflation.

- COLBY SMITH

Mr Powell, speaking on Tuesday at an event hosted by the National Association for Business Economics, deviated little from his recent message that the Fed should be responsive to the slowdown in monthly jobs growth and other signs of softness across the labour market.

While he conceded that economic activity was on a “somewhat firmer trajectory than expected,’ Mr Powell stressed that “the downside risks to employment appear to have risen.”

That suggests the central bank is likely to proceed with additional cuts at its two remaining meetings this year, one on Oct 28-29 and another in December.

Mr Powell indicated an inclination to continue lowering interest rates despite the fact that the government shutdown is delaying crucial data releases, including September's jobs report.

The Bureau of Labor Statistics said last week that it would be calling back some employees to produce the Consumer Price Index for September, which was initially set to be released on Wednesday. It will now be published on Oct 24, meaning Fed officials will have it in hand before they vote on interest rates. Data collection for future reports, as well as the release of other data, will restart only once lawmakers reach an agreement to fund the government.