Federal Reserve Chair Jerome Powell has signaled a cautious approach to interest rate cuts, emphasizing a slower pace than market expectations. In an interview with “60 Minutes,” Powell expressed confidence in the strong economy and clarified that any rate cuts would be contingent on sustained evidence of inflation moving down to the 2% target. Despite market anticipation for an imminent cut, Powell suggested that the Federal Open Market Committee (FOMC) is unlikely to take that step in March, emphasizing the need for more confidence before reducing interest rates.
During the interview, Powell acknowledged the economy’s resilience, citing strong job creation and moderate inflation. While markets have priced in aggressive expectations of five quarter-point cuts, Powell aligned with the FOMC’s December projections of three cuts, indicating a potential update in the outlook at the March meeting. Powell remained optimistic about the economy’s performance, attributing the absence of expected pain from rate hikes to robust growth and job creation.
Addressing concerns about political influence during a presidential election year, Powell reiterated the Fed’s commitment to making decisions independently of political considerations. He emphasized that politics does not play a role in their decisions and underlined the central bank’s dedication to its mandate. Powell’s comments underscore the Fed’s cautious and data-dependent stance as it navigates the economic landscape and evaluates the appropriate timing for potential rate adjustments.