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[Global Finance] Powell says the Fed is not ready to cut interest rates yet

2024-03-07

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U.S. Federal Reserve Chairman Powell said at a hearing in the House of Representatives on the 6th that if the economic development is broadly in line with expectations, the Fed may cut interest rates "sometime" this year, but at the moment the Fed is not ready to cut interest rates.

Powell went to the House of Representatives Financial Services Committee to attend the semi-annual monetary policy hearing on the same day. In his opening testimony, Powell said members of the Federal Open Market Committee, which sets monetary policy, believe it is "not appropriate to lower the target range for the federal funds rate until they have greater confidence that inflation will continue to move toward the Fed's 2 percent long-term target." suitable". The Fed is not ready to cut interest rates yet.

Powell said that if the economy develops broadly as expected, then "it may be appropriate to begin easing policy constraints at some point this year." But the outlook for economic growth remains unclear, as does the prospect of achieving the inflation target. Cutting interest rates too early or too much could lead to a reversal in inflation, ultimately requiring tighter monetary policy. But cutting interest rates too late or too little could also unduly weaken economic activity and employment. As such, the Fed will carefully assess incoming data, the evolving outlook and the balance of risks.

Powell will testify before the Senate Banking Committee on the 7th. From March 19 to 20, the Federal Reserve will hold its second monetary policy meeting this year. Currently, the market generally expects the Fed to maintain the target range for the federal funds rate unchanged at 5.25% to 5.5%.

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[Global Finance] Powell says the Fed is not ready to cut interest rates yet

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