2024-02-15 02:23:44
The stability of the US economy allows the Federal Reserve System (FRS) not to rush into making a decision to reduce the base interest rate, Chairman of the US Central Bank Jerome Powell said in an interview with CBS News on Sunday, Day.Az reports citing TASS.
“Given that the economy is strong, we feel we can approach the question of when to start lowering the rate with caution,” he said.
During a press conference following last week’s Federal Reserve meeting, Powell made it clear that by the March meeting, the Central Bank’s leadership is unlikely to be confident that inflation will move steadily towards the target sufficiently to begin cutting rates.
He repeated this idea in an interview with CBS News.
A rate cut in March “cannot be considered the most likely or base case scenario,” Powell said.
He stressed that the Federal Reserve is “actively discussing” the timing of the rate cut and will not wait to take this step until inflation returns to the Central Bank’s target of 2%.
“My colleagues and I are trying to find the right moment to begin easing the current restrictive policies,” Powell said. “That time is approaching.”
The Federal Reserve, on the one hand, is afraid to start cutting rates too early, as this could jeopardize the process of slowing inflation, and on the other hand, it does not want to delay easing policy due to the risk of recession in the economy, Market Watch notes.
“It would be prudent to just wait a while to see that the data continues to indicate a steady movement of inflation towards the Central Bank’s 2% target,” Powell said.
“The danger in moving too early is that the work is not really done, and it may turn out that the really good data that we’ve seen over the last six months won’t be a good indicator of where inflation is headed,” the Fed chief said.
He added that only a “couple” of the 19 members of the Fed’s board of governors would not want a rate cut this year.
“So, easing policy is the main scenario for us. We are just trying to choose the right moment for this,” he emphasized.
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