Federal Reserve Chair Jerome Powell recently engaged in a conversation with CNBC’s, shedding light on the central bank’s current economic stance and future plans.
US FED Chair Powell Keeps Interest Rates Unchanged 2024
Here are the key highlights from Powell’s discussion:
No Growth Mandate: Powell emphasized that the Federal Reserve’s primary concerns are not centered around economic growth. Instead, their focus lies on achieving maximum employment and maintaining price stability.
Positive Inflation Trend: Powell highlighted the encouraging trend of declining inflation without adversely affecting the economy or leading to increased unemployment. He expressed the Fed’s reluctance to intervene as long as inflation continues to decrease.
Rate Cut Considerations: Powell noted that the timing of potential rate cuts depends on upcoming inflation data. Strong inflation might lead to slower rate cuts, while favorable inflation numbers could prompt quicker adjustments.
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Consumer Confidence and Rising Prices: Acknowledging concerns about consumer confidence, Powell attributed the tepid improvement to the impact of rising consumer prices over the past few years. Despite decreasing inflation, consumer prices remain elevated, affecting people’s happiness and confidence.
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Skepticism About March Rate Cut: Powell expressed skepticism about a potential rate cut in March, stating that it’s unlikely the committee will gain enough confidence by then. He emphasized the importance of leaving options open and avoiding rushed decisions.
Factors Contributing to Inflation Decline: Powell highlighted not only tighter monetary policy but also improvements in supply chains and the labor market as factors contributing to the decline in inflation.
Caution Regarding Soft Landing: Despite positive economic progress, Powell refrained from declaring a “soft landing,” indicating that there is still work to be done. He acknowledged being encouraged by the current state of the economy but emphasized that the Federal Reserve is not declaring victory.
Peak for Tightening Cycle: Powell suggested that the peak for the tightening cycle might have been reached concerning policy rates. However, he cautioned that future adjustments would depend on evolving economic conditions and uncertainties.
Need for Continuing Evidence: Powell emphasized the need for ongoing evidence to build confidence that inflation is moving sustainably toward the Fed’s goal. He reiterated the importance of data supporting a sustainable path to 2% inflation.
