The Federal Open Market Committee can take its time lowering rates given the strength of the U.S. economy, Federal Reserve Chairman Jerome Powell said today during a speech in Dallas. He also briefly addressed the use of artificial intelligence in the banking sector.
Earlier this month, FOMC trimmed the target range for the federal funds rate by 25 basis points, lowering it to 4.5%-4.75%. Powell said the labor market remains in solid condition and the rate of inflation is on “a sustainable path” to the Federal Reserve 2% goal, but he cautioned the path to reaching that target is not preset.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully. Ultimately, the path of the policy rate will depend on how the incoming data and the economic outlook evolve.”
During a Q&A after his remarks, Powell was asked about banks’ use of AI. He said that banks are exploring generative AI but have not really fully implemented the technology. Banks are aware of the risks that generative AI may pose, he added.
“The good news is, in terms of the institutions we supervise, we understand that, but they understand that very well,” Powell said. “People are treating AI very carefully, and at least among the regulated banks, they are not just loosing it on their customers and the problems they face. They’re being very careful and thoughtful — at least I believe — in how they’re implementing it.”
