Fed Chair Jerome Powell

Federal Reserve Chair Jerome Powell holds a press convention following the discharge of the Fed’s rate of interest coverage determination on the Federal Reserve in Washington, U.S., January 31, 2024.
Picture: Evelyn Hockstein (Reuters)

US Federal Reserve Chair Jerome Powell appeared for a rare interview on the CBS Information present 60 Minutes on Sunday evening.

In the course of the interview, Powell supplied perception into the Fed’s technique for addressing inflation and gave some hints as to when the central bank will finally cut rates.

The interview was recorded Thursday, the day after the after the Fed announced it would keep its key interest rate at a 22-year excessive of 5.4%. The Fed has raised its benchmark rate quite a few instances since 2022 to fight excessive inflation, which has since subsided to ranges near the central financial institution’s goal.

The Fed has since steered it could reduce charges as soon as annual inflation hits 2%. In December, the US Bureau of Labor Statistics reported that annual inflation was at 3.4%.

The Fed’s subsequent assembly is March 19 to twenty.

Hear are key quotes from Powell’s interview with 60 Minutes.

Why not cuts fee now?

“With the financial system robust like that we we really feel like we are able to strategy the query of when to start to scale back rates of interest fastidiously,” Powell mentioned. “And we you understand, we need to see extra proof that inflation is transferring sustainably all the way down to 2%. We’ve some confidence in that our confidence is rising. We simply need some extra confidence earlier than we take that essential step of starting to to chop rates of interest”

Why goal 2% inflation

“Rates of interest will all the time embody an estimate of future inflation. If that estimate is 2%,” Powell mentioned. “Meaning you’ll have 2% extra you can reduce in rates of interest, the central financial institution could have extra ammunition extra energy to struggle a downturn. If charges are a little bit bit increased.”

No rate of interest cuts seemingly in March

“I believe it’s not going that this committee will attain that degree of confidence in time for the March assembly, which is in seven weeks,” Powell mentioned.


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