Fed Chair Jerome Powell said again Wednesday that the Federal Reserve will cut its key interest rate this year, though not right away.
First, Powell said he wants to see more evidence that inflation is falling sustainably back to the Fed’s 2% target.
Powell noted that inflation is slowing for both goods and services and did not express concern about the government’s latest inflation data, which showed some pickup in price increases in January, according to a report from The Associated Press. Instead, he said that, according to the Fed’s preferred gauge, inflation “has eased notably over the past year” even though it remains above the Fed’s target.
The Fed chair’s remarks, in prepared testimony to a House committee, echoed the message he expressed at his most recent news conference on Jan. 31. At that time, he said the Fed’s interest-rate setting committee needed “greater confidence” that inflation was nearly in check before it would reduce its benchmark rate.
In his remarks Wednesday, Powell offered no hints on the potential timing of rate cuts, the AP reported. Wall Street traders put the likelihood of a rate cut in June at 69%, according to futures prices, up slightly from about 64% a week ago.
Powell also said the Fed’s policymakers believe they are done raising rates, which are likely high enough to restrain the economy and inflation.
