Federal Reserve Chair Powell signals prudence in considering rate cuts amid strong economy
Jerome Powell
Federal Reserve Chair Jerome Powell conveyed a message of caution in deciding when to cut the benchmark interest rate, emphasising the importance of prudence in a Sunday night interview with CBS's "60 Minutes."
This is based on a Reuters report.
Powell highlighted the need to give time for the data to confirm a sustainable move toward the Federal Reserve's 2 per cent inflation target.
"The prudent thing to do is...to just give it some time and see that the data confirm that inflation is moving down to 2 per cent in a sustainable way," Reuters quoted him as saying.
Powell emphasised the strength of the current economy, reducing the risk of recession as policymakers await conclusive data to support potential rate cuts.
The interview, conducted on Thursday before a robust January jobs report on Friday, showcased Powell's measured approach amid a thriving US economy.
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The January jobs report revealed the addition of 353,000 new positions, robust wage growth, and a stable unemployment rate at 3.7 per cent over the past two years.
Powell refrained from labelling the current situation as a "soft-landing" but acknowledged the unusual circumstances.
He underlined the Federal Reserve's commitment to monitoring risks to both price stability and maximum employment, considering job growth as a factor that could influence the pace of rate cuts.
Powell, addressing the widely watched "60 Minutes," emphasised the Federal Reserve's focus on the real economy and making decisions for the medium and long term.
He expressed the need to strike a balance between the risk of moving too soon or too late in adjusting interest rates.
Powell used the platform to communicate a positive outlook, stating, "We think the economy's in a good place. We think inflation is coming down."
The Federal Reserve Chair reiterated the importance of gaining confidence in the sustainable decline of inflation toward the 2 per cent goal.
In the wide-ranging conversation, Powell reiterated comments made during the press conference after the recent Federal Reserve meeting, where the benchmark interest rate was held steady.
He indicated that the next meeting in March might be too soon for rate cuts to commence.
Powell acknowledged the potential impact of outside shocks, including geopolitical crises globally.
However, he downplayed some economic trouble spots, suggesting that issues like China's real estate problems and slowing growth might have less impact on the US than anticipated.
(With inputs from Reuters)