Powell to double down on ‘no rush to cut’ message
Federal Reserve Chair Jerome Powell (pictured) is expected to double down on his message that there’s no rush to cut interest rates, especially after fresh inflation data showed that price pressures persist.
Powell is headed to Capitol Hill, where he’ll deliver his semiannual monetary policy testimony to a House committee on Wednesday and a Senate panel on Thursday. The US central bank chief and nearly all of his colleagues have said in recent weeks that they can afford to be patient in deciding when to cut rates given underlying strength in the US economy.
The “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading,” Powell said in an interview with CBS’S 60 Minutes on February 5.That cautious approach has been validated in recent weeks by data showing inflation picked up last month. But it’s not likely to satisfy Democrats, who are anxious about how the path of rates could affect the November presidential election and down-ballot races.
They’re expected to press the Fed chief on why officials are keeping borrowing costs so high, risking damage to the economy, when they’ve made so much progress on inflation. The data highlight for the week will be the monthly jobs report on Friday. Economists project payrolls growth moderated in February to 200,000 following a 353,000 surge a month earlier that was the largest in a year. The jobless rate is seen holding at 3.7 per cent, while hourly earnings growth probably cooled.
Powell is expected to maintain a hawkish stance in his semiannual testimony to Congress, signalling to markets that the Fed is in no hurry to cut rates. If that leads to tighter financial conditions, it will keep the pressure on the economy and raise chance of additional lagged impacts from monetary policy.”