Powell insists the Fed will move carefully on rate cuts, with probably fewer than the market expects

Federal
Reserve
Chair
Jerome
Powell
vowed
in
an
interview
aired
Sunday
that
the
central
bank
will
proceed
carefully
with
interest
rate
cuts
this
year
and
likely
will
move
at
a
considerably
slower
pace
than
the
market
expects.

In
a
wide-ranging
interview
with
“60
Minutes”
after
last
week’s
Federal
Open
Market
Committee
meeting,
Powell
expressed
confidence
in
the
economy,
promised
he
wouldn’t
be
swayed
by
this
year’s
presidential
election,
and
said
the
pain
he
feared
from
rate
hikes
never
really
materialized.

“With
the
economy
strong
like
that,
we
feel
like
we
can
approach
the
question
of
when
to
begin
to
reduce
interest
rates
carefully,”
he
told
the
news
magazine’s
Scott
Pelley,
according
to
a
transcript
CBS
released.

“We
want
to
see
more
evidence
that
inflation
is
moving
sustainably
down
to
2%,”
Powell
added.
“Our
confidence
is
rising.
We
just
want
some
more
confidence
before
we
take
that
very
important
step
of
beginning
to
cut
interest
rates.”

As
he
did
during
a

Wednesday
news
conference,
he
said
it’s
unlikely
the
FOMC
will
make
that
first
move
in
March,
which
futures
markets
had
been
anticipating.

The
meeting
concluded
with
the
committee
holding
its
benchmark
borrowing
rate
in
a
range
between
5.25%-5.5%.
In
its
post-meeting
statement,
the
committee
said
it

would
not
be
cutting
“until
it
has
gained
greater
confidence
that
inflation
is
moving”
to
the
2%
target.

Markets
have
been
making
aggressive
bets
on
how
many
cuts
the
Fed
would
make
this
year.
Current
pricing
is
pointing
to
five
quarter-percentage
points
reductions,
though
Powell
backed
the
FOMC’s
December
“dot
plot”
grid
of
individual
members’
estimates
that
pointed
to
just
three
moves.

“We’ll
update
[the
outlook]
at
the
March
meeting.
I
will
say,
though,
nothing
has
happened
in
the
meantime
that
would
lead
me
to
think
that
people
would
dramatically
change
their
forecasts,”
he
said,
noting
that
“the
time
is
coming”
for
cuts
but
perhaps
not
yet.

Powell
was
broadly
optimistic
about
the
economy,
noting
that
inflation,
while
still
above
the
Fed’s
target,
has
moderated
while
the
jobs
market
is
strong.

Nonfarm
payrolls
accelerated
by
353,000
in
January,
the
Labor
Department
reported
Friday.
The
biggest
risk,
he
said,
is
likely
from
geopolitical
events.

During
the
Fed’s
annual
retreat
in
Jackson
Hole,
Wyoming,
in
August
2022,
in
the
early
days
of
the
rate-hike
cycle,

Powell
warned
that
the
policy
tightening
would
cause
“some
pain.”
However,
that
hasn’t
been
the
case,
he
said
in
the
“60
Minutes”
interview.

“It
really
hasn’t
happened.
The
economy
has
continued
to
grow
strongly.
Job
creation
has
been
high,”
he
said.
“So
really
the
kind
of
pain
that
I
was
worried
about
and
so
many
others
were,
we
haven’t
had
that.
And
that’s
a
really
good
thing.
And,
you
know,
we
want
that
to
continue.”

In
another
matter,
Powell
reiterated
that
neither
he
nor
his
colleagues
would
be
swayed
by
political
pressure
during
this
presidential
election
year.

“We
do
not
consider
politics
in
our
decisions.
We
never
do.
And
we
never
will,”
he
said.