The Fed is in no rush to cut rates amid inflation battle

Key Takeaways:

– Federal Reserve Chair Jerome Powell reiterated no rate cuts until inflation is under control
– Hinted at rate cuts later in the year but did not provide timing
– Emphasized Fed’s commitment to dual mandate of employment and stable consumer prices
– Payroll gains averaging 239,000 jobs per month with low unemployment rate
– Fed sees no urgency to cut rates given strong economy and labor market
– Powell stressed need for more assurance on inflation before rate cuts
– Fed has held federal funds rate steady at 5.25 to 5.5% since July 2023
– Powell on Capitol Hill for semiannual monetary policy testimony, scheduled to appear before Senate Banking Committee next

HousingWire:

Federal Reserve Chair Jerome Powell reiterated Wednesday that the central bank won’t be applying any cuts to benchmark interest rates until it’s sure that inflation is under control. 

In his prepared testimony to the House Financial Services Committee, Powell hinted at rate cuts “at some point this year” but kept the timing under wraps.

Powell emphasized the Fed’s commitment to its dual mandate of bolstering employment and keeping consumer prices stable. While inflation has been running above the Fed’s 2% target, it showed signs of easing in 2023 without significantly affecting the unemployment rate.

Since the middle of 2023, payroll gains have averaged 239,000 jobs per month and the unemployment rate has remained near historic lows, standing at 3.7% in January.

Looking at the resilient economy and strong labor market, the Fed sees no urgency to cut rates just yet. Powell stressed that the Fed needs more assurance that inflation is on a sustainable path toward its target before making any moves.

“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%,” Powell said in prepared remarks. 

Since 2022, the Fed has been tightening its stance on monetary policy, but it has held the federal funds rate steady at 5.25 to 5.5% since its July 2023 meeting.

The Fed chief will be on Capitol Hill until Thursday for his semiannual monetary policy testimony. He is scheduled to appear before the Senate Banking Committee tomorrow.

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Property Chomp’s Take:

Hey there! Let’s talk about the Federal Reserve and what Chair Jerome Powell had to say recently.

So, Powell made it clear that the central bank is not going to cut interest rates until they are confident that inflation is under control. In his testimony to the House Financial Services Committee, he mentioned that rate cuts may happen at some point this year, but he didn’t give away any specifics.

Powell emphasized that the Fed’s main goals are to support employment and keep consumer prices stable. Despite inflation running a bit higher than their 2% target, it has shown signs of easing without negatively impacting the job market. The unemployment rate has been holding steady at a low 3.7% with consistent job gains.

With the economy looking strong and the labor market doing well, the Fed is not in a rush to lower rates. Powell mentioned that they need to be sure that inflation is on a sustainable path towards their target before making any changes.

Since 2022, the Fed has been tightening its monetary policy, but they have kept interest rates steady for now. Powell will continue his testimony on Capitol Hill and will also appear before the Senate Banking Committee tomorrow.

It’s always interesting to see how the Fed’s decisions impact the economy, so let’s keep an eye on how things unfold in the coming months. Stay tuned for more updates!

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