Fed Chief Jerome Powell says a March rate cut is not likely

Federal Reserve Chair Jerome Powell holds a press convention following the discharge of the Fed’s curiosity rate coverage choice on the Federal Reserve in Washington, U.S., January 31, 2024. 

Evelyn Hockstein | Reuters

Fed Chairman Jerome Powell mentioned Wednesday that the central financial institution would likely not be snug sufficient with the trail of inflation by its March assembly to cut rates of interest.

“Based on the assembly right now, I might inform you that I do not assume it is likely that the committee will attain a degree of confidence by the point of the March assembly to determine March because the time to do this. But that is to be seen,” Powell mentioned.

The assertion got here in a press convention after the Fed’s January assembly, the place the central financial institution left its benchmark curiosity rate unchanged. Powell did say earlier within the press conference that rate cuts would likely start in some unspecified time in the future this yr.

Stocks fell to their session lows following Powell’s touch upon March because the Fed chief dashed hopes of merchants who need the central financial institution to slash charges sooner earlier than there’s a recession. The Dow Jones Industrial common misplaced 300 factors at one level.

The Fed’s coverage statement launched earlier Wednesday included a number of tweaks that recommended the central financial institution was taking additional rate hikes off the desk however not but able to cut. Powell’s feedback appeared to make clear for merchants that the stance would proceed for at the least another assembly.

Powell additionally declined to decide to a sequence of rate cuts as soon as the Fed makes its first transfer, saying that it “would rely upon the info.”

The central financial institution’s subsequent two coverage choice dates are scheduled for March 20 and May 1. In latest months, merchants and Wall Street strategists have targeted on these two dates as likely candidates for the primary rate cut, as inflation continues to fall and job progress slows.

The Fed’s most well-liked inflation gauge, the private consumption expenditures worth index, is up to date close to the top of every month. There will likely be just one extra PCE studying earlier than the Fed’s March assembly, however three extra earlier than May.

There may even be three extra federal jobs reviews launched earlier than the May assembly, with the January report due out on Friday.

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