Federal Reserve Chair Jerome Powell on Fed rate cuts in 2024 suggested that the Fed officials will wait for clearer indications of declining inflation before considering interest rate cuts in 2024. He added that despite a recent increase in prices that did not significantly alter the broader inflation trend, policymakers will look forward to more data.
Jerome Powell on Fed Rate Cuts in 2024
Jerome Powell, on interest rate cuts in 2024, said that the recent inflation data, though somewhat higher than anticipated, did not change the overall outlook. He added that he expects it would likely be suitable to begin reducing rates at some point this year.
During a speech at Stanford University in California on Wednesday, Jerome Powell on Fed rate cuts in 2024 said that it is important to understand whether the recent readings indicate more than a temporary increase.
He added that policymakers will not anticipate a decrease in the policy rate until they are more confident that inflation is consistently moving towards their 2% inflation target.
Powell and other Fed officials have consistently emphasized that they are not rushing to cut rates and will base their decisions on incoming data. However, Fed officials have maintained their projection for three interest-rate cuts this year despite some recent increases in key inflation indicators in 2024.
Rate Cuts in 2024
During the question-and-answer session following his remarks, Treasury yields either reversed or reduced their earlier gains, while the S&P 500 remained in positive territory. Investors are now estimating an equal chance of an initial rate cut in June, with futures pricing indicating a possibility of fewer than three reductions this year.
Powell said that due to the strong economy and the progress made on inflation so far, they have the flexibility to let incoming data guide our policy decisions regarding the rate cuts in 2024.
He added that if the economy progresses as anticipated, most FOMC participants see it as probable to start reducing the policy rate at some point this year. Powell said that the Federal Reserve will probably not introduce rate cuts at their upcoming gathering from April 30 to May 1.
The government data released on Friday showed that the Fed’s preferred measure of underlying inflation, the core personal consumption expenditures price index, decreased in February after a larger-than-previously-reported increase in January.
Kathy Bostjancic, chief economist at Nationwide Mutual Insurance Co. said that the views of Jerome Powell on interest rate cuts in 2024 align with their view that a rate cut in June is a possibility. Powell mentioned last month that if there is an unexpected weakening in the job market, it could prompt a response from Fed officials.
In March, Fed officials had different opinions on how the rate cuts in 2024 would occur. The central bank’s “dot plot” revealed that ten officials projected three or more quarter-point cuts this year, while nine anticipated two or fewer.
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