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on thursday (september 19th) local time, u.s. treasury secretary janet yellen said that the federal reserve's interest rate cut on wednesday was a very positive signal for the u.s. economy, reflecting progress in taming inflation and its determination to protect the job market.

the federal reserve announced a 50 basis point rate cut on wednesday, lowering the target range of the federal funds rate to 4.75%-5.00%, exceeding some market expectations. this is the first rate cut by the federal reserve since the start of the rate hike cycle in march 2022, marking the beginning of a much-anticipated new round of rate cuts.

yellen attended an event hosted by the atlantic on thursday, where she commented on the fed's latest monetary policy actions.

"this reflects the confidence on the part of the fed that inflation has fallen sharply and is moving toward its 2% target and that the risks to inflation have been significantly reduced," yellen said, adding that the most important thing now is to ensure a strong job market.

previously released data showed that the us cpi rose 2.5% year-on-year in august, falling for the fifth consecutive month, and rose 0.2% month-on-month; the core cpi in august rose 3.2% year-on-year and 0.3% month-on-month.

"the stance of monetary policy remains restrictive and our expectations are for further reductions in interest rates, but of course it is necessary to pay attention to the incoming data because there are always surprises," yellen said.

the federal reserve's interest rate forecast "dot plot" shows that policymakers believe that interest rates will be cut by another 50 basis points this year, a cumulative 100 basis points in 2025, and a 50 basis point cut in 2026. interest rates will remain between 2.75% and 3% for a long time.

regarding the u.s. job market, yellen said that although it is not as hot as in the past two years, the labor market is still normal and healthy and is expected to continue this trend.

the u.s. unemployment rate was 4.2% in august. in its latest "summary of economic prospects", the federal reserve said it was confident that the unemployment rate would remain at 4.4% by the end of this year and next.