Washington, March 7 (IANS) US Federal Reserve Chair Jerome Powell has reiterated that the central bank is not ready to start cutting interest rates, noting that he needs to see a little bit more data before taking any action.
“If the economy evolves broadly as expected, it will likely be appropriate to begin dialling back policy restraint at some point this year,” Powell said in prepared remarks for a congressional hearing before the House Financial Services Committee.
“But the economic outlook is uncertain, and ongoing progress toward our 2 per cent inflation objective is not assured,” Powell said in his testimony.
“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 per cent,” he said.
Overall, the speech didn’t introduce any fresh perspectives on monetary policy. The remarks, however, highlighted officials’ ongoing worry about maintaining the gains made in combating inflation and emphasized their commitment to making decisions based on upcoming data, Xinhua news agency reported.
“Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2 per cent,” said the Fed chair.
“At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment,” he said.
Powell will testify before the Senate Committee on Banking, Housing, and Urban Affairs on Thursday.
After implementing 11 interest rate increases totalling 5.25 percentage points between March 2022 and July 2023, the Fed is widely expected to ease up its policy stance.
However, in the past few weeks, these expectations have shifted due to several cautious remarks from Federal Reserve officials.
The Chicago Mercantile Exchange Group’s FedWatch Tool, which acts as a barometer for the market’s expectation of the Fed funds target rate, showed that the probability of the Fed maintaining rates in the March meeting was 95 per cent.
The next Federal Open Market Committee (FOMC) meeting will be held on March 19-20.
–IANS
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