Federal Reserve Chairman Powell vowed in an interview broadcasted on Sunday (4th local time) that the Federal Reserve will cautiously push for interest rate cuts this year, which may be much slower than market expectations.
After last week's Federal Open Market Committee meeting, Powell gave an interview to American media, expressing his confidence in the economy, promising not to be shaken by this year's presidential election, and stating that the pain he was worried about from raising interest rates has never truly become a reality.
According to the transcript released by the American media, he told reporters, "In such a strong economy, we feel that we can handle the issue of when to start cutting interest rates cautiously."
Powell added, "We hope to see more evidence that the inflation rate is continuing to decline to 2%, and our confidence is increasing. We just hope to have more confidence before starting the very important step of lowering interest rates."
As he said at last Wednesday's press conference, he said that the Federal Open Market Committee is unlikely to take the first step in March, as the futures market has always expected.
At the end of last week's meeting, the committee maintained the benchmark borrowing rate in the range of 5.25% -5.5%. In a statement after the meeting, the committee stated that it will not cut interest rates until there is greater confidence that inflation is moving towards the 2% target.
The market has been actively betting on how many times the Federal Reserve will cut interest rates this year. The current pricing shows that the Federal Reserve will cut interest rates by 25 basis points, although Powell supports the FOMC's December chart, which shows the estimates of each member and shows that the Federal Reserve will only raise interest rates three times.
"We will update the outlook at the March meeting. However, what I want to say is that during this period, nothing will make me believe that people will significantly change their predictions," he said. He pointed out that the time to cut expenses is coming, but it may not have arrived yet.
Powell is optimistic about the overall economy, pointing out that although inflation remains above the Federal Reserve's target, it has eased somewhat, and the job market is also strong. The US Department of Labor announced on Friday that non-farm employment increased by 353000 people in January. He said that the biggest risk may come from geopolitical events.
In August 2022, when the interest rate hike cycle began, Powell warned at the Federal Reserve's annual meeting held in Jackson Hole, Wyoming that policy tightening would bring "some pain.".
However, that's not the case. In this interview, he said, "This really hasn't happened. The economy continues to grow strongly. The job opportunities created have always been high. So the pain that I and many others are worried about has not been experienced. This is really a good thing. You know, we hope this situation continues."
On the other hand, Powell reiterated that in this year's presidential election year, he and his colleagues will not be swayed by political pressure.
"Our decisions do not take into account political factors, they have never, never will," Powell said.