watch
now
Federal
Reserve
Chair
Jerome
Powell
on
Wednesday
reiterated
that
he
expects
interest
rates
to
start
coming
down
this
year,
but
is
not
ready
yet
to
say
when.
In
prepared
remarks
for
congressionally
mandated
appearances
on
Capitol
Hill
Wednesday
and
Thursday,
Powell
said
policymakers
remain
attentive
to
the
risks
that
inflation
poses
and
don’t
want
to
ease
up
too
quickly.
“In
considering
any
adjustments
to
the
target
range
for
the
policy
rate,
we
will
carefully
assess
the
incoming
data,
the
evolving
outlook,
and
the
balance
of
risks,”
he
said.
“The
Committee
does
not
expect
that
it
will
be
appropriate
to
reduce
the
target
range
until
it
has
gained
greater
confidence
that
inflation
is
moving
sustainably
toward
2
percent.”
Those
remarks
were
taken
verbatim
from
the
Federal
Open
Market
Committee’s
statement
following
its
most
recent
meeting,
which
concluded
Jan.
31.
During
the
question-and-answer
session
with
House
Financial
Services
Committee
members,
Powell
said
he
needs
“see
a
little
bit
more
data”
before
moving
on
rates.
“We
think
because
of
the
strength
in
the
economy
and
the
strength
in
the
labor
market
and
the
progress
we’ve
made,
we
can
approach
that
step
carefully
and
thoughtfully
and
with
greater
confidence,”
he
said.
“When
we
reach
that
confidence,
the
expectation
is
we
will
do
so
sometime
this
year.
We
can
then
begin
dialing
back
that
restriction
on
our
policy.”
Stocks
posted
gains
as
Powell
spoke,
with
the
Dow
Jones
Industrial
Average
up
more
than
250
points
heading
into
midday.
Treasurys
yields
mostly
moved
lower
as
the
benchmark
10-year
note
was
off
about
0.3
percentage
point
to
4.11%.
Rates
likely
at
peak
In
total,
the
speech
broke
no
new
ground
on
monetary
policy
or
the
Fed’s
economic
outlook.
However,
the
comments
indicated
that
officials
remain
concerned
about
not
losing
the
progress
made
against
inflation
and
will
make
decisions
based
on
incoming
data
rather
than
a
preset
course.
“We
believe
that
our
policy
rate
is
likely
at
its
peak
for
this
tightening
cycle.
If
the
economy
evolves
broadly
as
expected,
it
will
likely
be
appropriate
to
begin
dialing
back
policy
restraint
at
some
point
this
year,”
Powell
said
in
the
comments.
“But
the
economic
outlook
is
uncertain,
and
ongoing
progress
toward
our
2
percent
inflation
objective
is
not
assured.”
He
noted
again
that
lowering
rates
too
quickly
risks
losing
the
battle
against
inflation
and
likely
having
to
raise
rates
further,
while
waiting
too
long
poses
danger
to
economic
growth.
Markets
had
been
widely
expecting
the
Fed
to
ease
up
aggressively
following
11
interest
rate
hikes
totaling
5.25
percentage
points
that
spanned
March
2022
to
July
2023.
In
recent
weeks,
though,
those
expectations
have
changed
following
multiple
cautionary
statements
from
Fed
officials.
The
January
meeting
helped
cement
the
Fed’s
cautious
approach,
with
the
statement
explicitly
saying
rate
cuts
aren’t
coming
yet
despite
the
market’s
outlook.
As
things
stand,
futures
market
pricing
points
to
the
first
cut
coming
in
June,
part
of
four
reductions
this
year
totaling
a
full
percentage
point.
That’s
slightly
more
aggressive
than
the
Fed’s
outlook
in
December
for
three
cuts.
Inflation
easing
Despite
the
resistance
to
move
forward
on
cuts,
Powell
noted
the
movement
the
Fed
has
made
toward
its
goal
of
2%
inflation
without
tipping
over
the
labor
market
and
broader
economy.
“The
economy
has
made
considerable
progress
toward
these
objectives
over
the
past
year,”
Powell
said.
He
noted
that
inflation
has
“eased
substantially”
as
“the
risks
to
achieving
our
employment
and
inflation
goals
have
been
moving
into
better
balance.”
Inflation
as
judged
by
the
Fed’s
preferred
gauge
is
currently
running
at
a
2.4%
annual
rate
—
2.8%
when
stripping
out
food
and
energy
in
the
core
reading
that
the
Fed
prefers
to
focus
on.
The
numbers
reflect
“a
notable
slowing
from
2022
that
was
widespread
across
both
goods
and
services
prices.”
“Longer-term
inflation
expectations
appear
to
have
remained
well
anchored,
as
reflected
by
a
broad
range
of
surveys
of
households,
businesses,
and
forecasters,
as
well
as
measures
from
financial
markets,”
he
added.
Powell
is
likely
to
face
a
variety
of
questions
during
his
two-day
visit
to
Capitol
Hill,
which
started
with
an
appearance
Wednesday
before
the
House
Financial
Services
Committee
and
concludes
Thursday
before
the
Senate
Banking
Committee.
Questioning
largely
centered
around
Powell’s
views
on
inflation
and
rates.
Republicans
on
the
committee
also
grilled
Powell
on
the
so-called
Basel
III
Endgame
revisions
to
bank
capital
requirements.
Powell
said
he
is
part
of
a
group
on
the
Board
of
Governors
that
has
“real
concerns,
very
specific
concerns”
about
the
proposals
and
said
the
withdrawal
of
the
plan
“is
a
live
option.”
Some
of
the
earlier
market
gains
Wednesday
faded
following
reports
that
New
York
Community
Bank
is
looking
to
raise
equity
capital,
raising
fresh
concerns
about
the
state
of
midsize
U.S.
banks.
Though
the
Fed
tries
to
stay
out
of
politics,
the
presidential
election
year
poses
particular
challenges.
Former
President
Donald
Trump,
the
likely
Republican
nominee,
was
a
fierce
critic
of
Powell
and
his
colleagues
while
in
office.
Some
congressional
Democrats,
led
by
Sen.
Elizabeth
Warren
of
Massachusetts,
have
called
on
the
Fed
to
reduce
rates
as
pressure
builds
on
lower-income
families
to
make
ends
meet.
Rep.
Ayanna
Pressley,
D-Ohio,
joined
the
Democrats
in
calling
for
lower
rates.
During
his
term,
Democrats
frequently
criticized
Trump
for
trying
to
cajole
the
Fed
into
cutting.
“Housing
inflation
and
housing
affordability
[is]
the
No.
1
issue
I’m
hearing
about
from
my
constituents,”
Pressley
said.
“Families
in
my
district
and
throughout
this
country
need
relief
now.
I
truly
hope
the
Fed
will
listen
to
them
and
cut
interest
rates.”
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