POWELL: FED ON TRACK FOR 3 RATE CUTS
WASHINGTON — Chair Jerome Powell said in an interview broadcast Sunday night that the Federal Reserve remains on track to cut interest rates three times this year, a move that’s expected to begin as early as May.
Powell, in an interview recorded Thursday for CBS’ “60 Minutes,” also said the nation’s job market and economy are strong, with no sign of a recession on the horizon.
“I do think the economy is in a good place,” he said, “and there’s every reason to think it can get better.”
Powell’s comments largely echoed remarks he gave at a news conference Wednesday, after the Fed decided to keep its key interest rate steady at about 5.4%, a 22year high. To fight inflation, the Fed raised its benchmark rate 11 times beginning in March 2022, causing loans for consumers and businesses to become much more expensive.
The Fed chair also reiterated that the central bank’s next meeting in March was likely too soon for a rate cut. Most economists think the first cut is likely to come in
May or June.
With inflation steadily cooling, nearly all the 19 members of the Fed’s policy-setting committee have agreed that cuts in the central bank’s key rate will be appropriate this year, Powell said in the “60 Minutes” interview. A reduction in that rate would help lower the cost of mortgages, auto loans and credit cards.
In December, Fed officials indicated that they envisioned three rate cuts in 2024. Powell told “60 Minutes” that that forecast likely still reflected policymakers’ views.
As gauged by the Fed’s preferred measure, inflation fell to just 2.6% in December compared with 12 months earlier. And in the second half of 2023, inflation was measured at an annual pace of just 2%, matching the Fed’s target level, down drastically from a peak of 7.1% in the summer of 2022.
Powell attributed the inflation surge of 2021-2022 to the disruptions of the pandemic, including a shift in spending away from services, like restaurant meals, to goods, like home office furniture and exercise bikes. At the same time, COVID closed down or slowed factories across the globe.