Federal Reserve Chair Jerome Powell said policymakers will wait for clearer signs of lower inflation before cutting interest rates, even if a recent rise in prices did not alter their overall path. In remarks compiled by Bloomberg, Powell said the recent inflation numbers, while higher than expected, did not “materially” change the overall picture. He reiterated his expectation that it will probably be appropriate to begin reducing rates “sometime this year.”
“On inflation, it is too early to say whether recent readings represent more than just an increase,” Powell said Wednesday in the text of a speech at Stanford University in California. “We do not expect it to be appropriate to reduce our policy rate until we have greater confidence that inflation is moving sustainably towards 2%.”
The Federal Open Market Committee held rates steady last month. Officials have closely maintained their outlook for three interest rate cuts this year, even as key inflation metrics have risen in 2024. Powell and other Fed officials have repeatedly said they are in no rush to cut rates and that their moves They will depend on the incoming data.
As the Fed chair answered questions, Treasury yields reversed or pared earlier gains. The S&P 500 remained higher. Investors are betting roughly equally on an initial cut in June, and pricing suggests they see a chance of fewer than three cuts this year, according to futures.
“Given the strength of the economy and the progress on inflation so far, we have time to let incoming data guide our policy decisions,” Powell said in opening remarks before a fireside chat. “If the economy broadly evolves as we expect, most FOMC participants likely see it appropriate to begin reducing the policy rate sometime this year.” Powell’s prepared comments reinforce those he has made after the March meeting. They also suggest the Fed is unlikely to cut rates at its next meeting from April 30 to May 1.
