Federal Reserve Chairman Jerome Powell testifies during the Senate Committee on Banking, Housing and Urban Affairs hearing entitled “The Semiannual Monetary Policy Report to Congress” on Thursday, March 7, 2024, in the Dirksen Building.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Federal Reserve Chairman Jerome Powell suggested Thursday that interest rate cuts may not be too far away if inflation signals play out.
In his remarks to the Senate Banking Committee, the central bank chief did not give a specific timeline for when he expects easing, but suggested that day could come soon.
“We are waiting to become more confident that inflation will move sustainably to 2%. When we have that confidence and we are not far away, it will be appropriate to start reducing the level of restrictions,” Powell said in response to a question about interest rates and inflation. He said the cuts would be made so that the Fed “does not push the economy into recession instead of normalizing its policies when the economy returns to normal.”
Powell spoke at a time when financial market expectations of the Fed’s policy fluctuated significantly.
At the start of the year, futures traders bet that the Fed would start doing so in March and continue until it had cut interest rates six or seven times this year. The outlook now assumes the first cut will occur in June, with four cuts totaling a full percentage point by the end of 2024.
Latest inflation data suggests the pace of price increases is continuing to slow, although the consumer price index rattled markets when it came in higher than expected for January. Still, Powell indicated in his congressional testimony this week that inflation continues to fall, but has not yet reached the point where the Fed would be willing to cut it.
“I think we’re in the right place,” Powell said of the current political stance.
Source link
2024-03-07 20:23:52
www.cnbc.com
