Federal Reserve Chairman Jerome Powell holds a press conference following the release of the Fed’s interest rate decision at the Federal Reserve on January 31, 2024 in Washington, United States.
Evelyn Hockstein | Reuters
Federal Reserve Chairman Jerome Powell vowed in an interview broadcast Sunday that the central bank would tread carefully on rate cuts this year and would likely do so much more slowly than the market expects.
In a wide-ranging interview with “60 Minutes” after the Federal Open Market Committee meeting last week, Powell expressed confidence in the economy, promised he would not be influenced by this year’s presidential election and said he would be influenced by the Never fear interest rate increases would really materialize.
“With such a strong economy, we feel like we can approach the question of when to start cutting interest rates cautiously,” he told Newsmagazine’s Scott Pelley, according to a transcript published by CBS.
“We want to see more evidence that inflation is falling sustainably to 2%,” Powell added. “Our confidence is increasing. We just want a little more confidence before we take the very important step and start cutting interest rates.”
During a press conference on Wednesday, he said it was unlikely that the FOMC would make the first move in March that futures markets had expected.
The meeting ended with the committee leaving its reference interest rate in a range between 5.25% and 5.5%. In its statement after the meeting, the committee said it would not cut interest rates “until it has gained greater confidence that inflation is moving toward the 2 percent target.”
Markets have been betting aggressively on how many rate cuts the Fed would make this year. Current prices suggest a decline of five quarter percentage points, although Powell supported the FOMC’s December “dot plot” grid of individual member estimates that suggested only three moves.
“We will update [the outlook] at the March meeting. However, I have to say that nothing has happened in the meantime that would lead me to believe that people would change their forecasts dramatically,” he said, pointing out that “the time for cuts has come,” but perhaps not yet.
Powell expressed broad optimism about the economy, noting that while inflation is still above the Fed’s target, it has moderated while the job market is strong. The Labor Department reported Friday that nonfarm payrolls rose by 353,000 in January. In his opinion, the biggest risk probably comes from geopolitical events.
During the Fed’s annual meeting in Jackson Hole, Wyoming, in August 2022, in the early days of the rate hike cycle, Powell warned that tightening monetary policy would cause “some pain.” However, that was not the case, he said in the “60 Minutes” interview.
“That really didn’t happen. The economy continued to grow strongly. A lot of jobs have been created,” he said. “The kind of pain that I and so many others were worried about, we really didn’t have. And that’s really a good thing. And you know, we want it to stay that way.”
On another matter, Powell reiterated that neither he nor his colleagues would be influenced by political pressure in this presidential election year.
“We do not take politics into account in our decisions. We never do that. And we never will,” he said.
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2024-02-05 00:05:25
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