Federal Reserve Chair Jerome Powell said policymakers will likely wait beyond March to cut interest rates as he sought to explain the central bank’s rationale for eventual reductions to a broad public audience.
In an interview conducted Thursday with CBS’s 60 Minutes and airing Sunday evening, Powell reiterated that Fed officials want to see more economic data to assure that inflation is on a sustainable path to their 2% goal, according to a transcript provided by CBS.
The “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading,” Powell said in the interview with CBS’s Scott Pelley.
“We don’t think that’s the case,” he said. “But the prudent thing to do is to, is to just give it some time and see that the data continue to confirm that inflation is moving down to 2% in a sustainable way.”
Powell said it isn’t likely that the Federal Open Market Committee, the Fed panel that sets interest rates, “will reach that level of confidence” about inflation’s path by its March 19-20 gathering, echoing remarks he made at a press conference Wednesday.
The Fed chief also said he didn’t expect policymakers to “dramatically” change their forecasts for rates next year, which in December showed they expect their benchmark lending rate to reach 4.6% by the end of 2024, according to their median estimate.
“All but a couple of our participants do believe it will be appropriate to, for us to begin to dial back the restrictive stance by cutting rates this year,” Powell said. “And so, it is certainly the base case that, that we will do that. We’re just trying to pick the right time, given the overall context.”
The interview offers Powell an opportunity to communicate to a broader audience just days after the Fed’s decision to hold interest rates unchanged at a range of 5.25% to 5.5%, a 22-year high. Policymakers on Wednesday cemented the end of their aggressive campaign to push up rates, but have signaled they’re in no rush to cut them.
While inflation has subsided substantially in recent months, Powell has repeatedly emphasized the central bank’s need to see more data before lowering borrowing costs. He indicated last week a rate cut is unlikely in the first quarter.
The Fed’s preferred inflation metric slowed to a rate of 2.6% by the end of last year, well below its peak of 7.1% in mid-2022. While that’s still above the Fed’s 2% goal, the labor market remains strong. Data out Friday showed unemployment held at a historically low 3.7% in January as employers added another 353,000 jobs.
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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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Published: 05 Feb 2024, 07:02 AM IST