Fed Chairman Powell insisted at the press conference held after the Fed's significant cut of 50 basis points in the benchmark interest rate that this move is not only to support the current President Biden, nor is it to respond to the upcoming economic collapse. Powell acknowledged from the outset that recent inflation and employment data led the Federal Open Market Committee (FOMC) to conclude that 50 basis points were reasonable. Powell said, 'We have two employment reports, for July and August. We also have two inflation reports, one of which was released during the blackout. The QCEW report shows that the wage report figures we received may have been artificially inflated and will be revised downward. We also see anecdotal data such as the Beige Book.' He said, 'Our conclusion is that this is the right thing to do for the economy and the people we serve, and that's how we make decisions.'

1. **When asked how the market should determine whether the future meeting will cut interest rates by 25 basis points or 50 basis points, Powell said: "A good starting point is the Summary of Economic Projections (SEP)." If you look at the SEP, considering our current situation and our expectations, you will find that this is a process of readjusting our policy stance from high inflation and low unemployment rates a year ago to a more appropriate position." He added: "There is no content in the SEP to indicate that the committee is in a hurry, and this process evolves over time."
2. Powell was asked about the Fed's latest projections, which showed that the FOMC expects the federal funds Interest Rate to remain above the long-term neutral Interest Rate estimate by the end of next year. Does this indicate that officials believe the short-term neutral Interest Rate has risen slightly? Powell said, 'We know that the policy stance we took in July 2023 was when the unemployment rate was 3.5%. Today, the unemployment rate has risen to 4.2% and inflation has fallen to a few percent above 2%. We know it's time to readjust our policies to make them more appropriate as inflation and employment move towards more sustainable levels. The risks are balanced now.'
3. Later, the Fed chairman was asked how big the gap in FOMC voting support for 50 basis points is, and whether it is clear that this will be the result of the September meeting. Powell replied, "When the power goes out, we let it stay on. There have been a lot of back-and-forths today, great discussions, and the decision voted on by the committee has also received widespread support." Powell added: "All 19 committee members have written down the rate cut many times this year, all 19 of them, which is a big change compared to June. We have made a good start on this, to be honest, which does show that we have confidence that inflation will decline to 2% on a sustainable basis, which empowers us. We can make a good start, and I'm glad we did."
4. When asked if a larger rate cut represents growing concerns about the labor market, Powell insisted that this is the reality. The latest Fed forecast shows that the unemployment rate will peak at 4.4%. Powell said, 'The labor market conditions are stable, and our policy actions today are aimed at maintaining this situation.' 'You could say the same about the entire economy. The US economy is in good shape, with a steady rise in speed and a decline in inflation. The labor market is in a strong position. We want to keep it.'
5. Powell was also asked whether a 50 basis point rate cut meant that the Fed was starting its easing cycle too late.

He replied, "We don't think we're behind, we think this is timely, you can see this as a signal of our commitment not to fall behind." 6. He was asked why the labor market conditions should not be expected to deteriorate further if the policy remains restrictive. Powell said: "The current situation is very close to what I call the maximum employment level, and you are close to that goal. So, what is driving it? Obviously, the number of new jobs has declined in the past few months, which is worth following. But ultimately, we believe that by adjusting our policies appropriately, you can continue to see the economy rise, which will support the labor market." He added:"Meanwhile, if you look at the economic rise and economic activity data, the retail sales data we just received, the second quarter GDP, all of which indicate that the economy is still steadily rising. Therefore, over time, this should also support the labor market." 7. Powell was asked what the FOMC will learn between now and the November meeting, which will provide the magnitude of the next steps. He replied, 'There is more data than usual. We will see another employment report, and actually we will get a second employment report on the Friday before the meeting, as well as inflation data. We will get all of this data, and we will follow it closely.' 8. When asked about the possibility of returning to the era of 'cheap money' before the recent inflation, Powell said they can only speculate, but he thinks it's unlikely. He said, "Intuitively, many people would say, we may not go back to the era when trillions of dollars of sovereign bonds traded at negative intrerest rates, and neutral intrerest rate may look like a negative value. Now it seems far away. My own feeling is that we won't go back to that era, but to be honest, we'll find the answer. In my opinion, the neutral intrerest rate may be much higher than it was then, how high is it? I just think we don't know." 9. Powell also answered some questions, including whether the significant rate cut before the election today was politically motivated and aimed at supporting the incumbent president. Powell insisted, "Our work is to serve all Americans, not any politicians, political figures, reasons, or issues. We represent all Americans to maximize employment and stabilize prices. This is a good institutional arrangement, beneficial to the public, and I hope and believe it will continue." The last question facing the Fed Chairman is whether the FOMC sees any potential shocks that could drive the US economy into recession in the future. He replied, "I don't think so. I haven't seen any signs that indicate an increase in the possibility of an economic recession. You can see that the economy is rising at a stable pace, inflation is declining, and the labor market remains very stable."