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Federal Reserve Chairman Jerome Powell holds a press conference after the release of the Fed’s interest rate policy decision at the Federal Reserve in Washington, US on January 31, 2024.
Evelyn Hockstein | reuters
Federal Reserve Chairman Jerome Powell vowed in an interview broadcast Sunday that the central bank will proceed cautiously with interest rate cuts this year and at a much slower pace than markets expected.
In a wide-ranging interview with “60 Minutes” after last week’s Federal Open Market Committee meeting, Powell expressed confidence in the economy, promised he would not be swayed by this year’s presidential election, and said raising rates would be The pain he had suffered never happened. Actually came true.
According to a transcript released by CBS, he told the news magazine’s Scott Pelley, “With the economy being this strong, we think we can carefully consider the question of when to start lowering interest rates.” “
“We want to see further evidence that inflation is continuing to move below 2%,” Powell said. “Our confidence is growing. We just want a little more confidence before taking an important step like starting to cut interest rates.”
As he did during Wednesday’s press conference, he said it was unlikely the FOMC would take the first steps in March, which futures markets were expecting.
The meeting concluded with the committee keeping its benchmark lending rate between 5.25%-5.5%. In its statement after the meeting, the committee said it would not cut to the 2% target “until it becomes more confident that inflation is rising”.
The market is betting aggressively on how much the Fed will cut rates this year. Current pricing is pointing to a cut of five quarter-percentage points, although Powell supported the FOMC’s December “dot plot” grid of individual members’ projections that points to only three moves.
“We will update [the outlook] In the March meeting. I will say, however, that nothing has happened in the meantime that would make me think people would dramatically change their forecasts,” he said, noting that “the time is coming” for cuts but probably not yet.
Powell was broadly optimistic about the economy, saying inflation, though still above the Fed’s target, has subsided while the jobs market remains strong. The Labor Department reported Friday that nonfarm payrolls increased by 353,000 in January. The biggest risk is likely to come from geopolitical events, he said.
During the Fed’s annual retreat in Jackson Hole, Wyoming in August 2022, early in the rate-hike cycle, Powell warned that policy tightening would cause “some pain.” However, that’s not the case, he said in a “60 Minutes” interview.
“That has not actually happened. The economy continues to grow strongly. There has been more job creation,” he said. “So we really haven’t had the kind of pain that I and many other people were worried about. And that’s a really good thing. And, you know, we want that to continue.”
In another matter, Powell reiterated that neither he nor his colleagues will be influenced by political pressure during this presidential election year.
He said, “We don’t consider politics in our decisions. We never do. And we never will.”
