Thu. Feb 22nd, 2024

    Powell says Fed still expects to make 3 interest rate cuts this year

    Federal Reserve Chair Jerome Powell holds a press conference in Washington, D.C., the United States, Sep. 20, 2023.

    The Federal Reserve in December forecast three interest rate cuts in 2024.In a “60 Minutes” interview, Fed Chair Jerome Powell said nothing has “dramatically” changed since.The first cuts may come as early as May, but Powell did not explicitly state a timeline.

    In a “60 Minutes” interview on Sunday, Fed Chair Jerome Powell said that the Federal Reserve‘s December 2023 forecasts for three interest rate cuts this year remain the same.

    In December, participants in a meeting held by the Federal Open Market Committee predicted three cuts for 2024, bringing interest rates down to 4.6%.

    Powell told “60 Minutes” correspondent Scott Pelley that those forecasts remain.

    “I will say, though, nothing has happened in the meantime that would lead me to think that people would dramatically change their forecasts,” Powell said when asked if the cuts to 4.6% are still likely.

    Powell did not explicitly provide a timeline, but Pelley noted during the broadcast that the first cut could come in the “middle of the year, few months before the election” in November.

    The Associated Press reported that most economists have predicted that the cuts can come as early as May or June.

    Bank of America said on Thursday that cuts likely won’t come until June. During a Wednesday presser, Powell also spilled cold water on any expectations that cuts would come as early as March.

    “If the economy were to weaken, then we could reduce rates earlier and perhaps faster. If the economy were to prove — if inflation were to prove more persistent, that could call for us to reduce rates later and perhaps slower,” Powell said, according to a transcript of the “60 Minutes” interview. “So, it really is going to be dependent on the incoming data as that affects the outlook.”

    Since July, the Fed interest rate has sat at 5.25% to 5.5%. But despite a strong labor market and cooling inflation, Powell said in the interview that the Fed wants to see “more evidence that inflation is moving sustainably down to 2%” to make interest rate cuts sooner.

    In a Friday interview with Fox News, Donald Trump said that Powell was going to make interest rate cuts this year “to probably help the Democrats,” adding, “It looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected.”

    But Powell insisted during the “60 Minutes” interview that the Fed’s decisions are apolitical.

    “We do not consider politics in our decisions. We never do. And we never will,” Powell said, adding that “integrity is priceless. And at the end, that’s all you have. And we plan on keeping ours.”

    Read the original article on Business Insider

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