Federal Reserve Chairman Jerome Powell said on CBS News’ “60 Minutes” broadcast on the evening of the 4th (the morning of the 5th Japan time) that the monetary authority is likely to wait until after March before cutting interest rates. He said it was big. It explains to ordinary Americans the rationale for future interest rate cuts.
In the meeting, the Chairman reiterated his desire to see more economic data to confirm that inflation is on track to sustainably slow to the 2% price target. Chairman Powell’s interview was recorded on the 1st. CBSRecord of remarkswas announced.
Fed Chairman Powell interview on “60 Minutes”
Source: 60 Minutes
“The danger of acting hastily is that the job is not yet done and that the very good numbers we’ve had over the past six months are not the real guide to where inflation is going,” Powell said on curbing inflation. It’s a case of finding out later.”
“I don’t think that will actually happen,” he said, but “it would be prudent to take some time and continue to see in the data that inflation is falling towards 2% in a sustained manner.” It’s a method.”
He also said it was unlikely that the Federal Open Market Committee (FOMC) would “achieve such a level of certainty” about the path of inflation by its next meeting on March 19-20. The chairman made similar remarks at the press conference after the FOMC meeting on the 31st of last month.
CBS’ Scott Pelley, who interviewed Chairman Powell on the show, said in a voiceover that the chairman had hinted at the possibility of the first rate cut around the middle of this year. There was no evidence of this in the transcripts released by him.
U.S. Treasury prices fell in early Asian trading as Chairman Powell’s remarks on the show highlighted the possibility that bond investors had overpriced the possibility of a rapid rate cut. The market decline affected all maturities, with the yield on 10-year bonds rising 4 basis points (bp, 1 bp = 0.01%) to 4.06% as of 8:04 a.m. Hong Kong time (9:04 a.m. Japan time).
The chairman also said he did not expect Fed officials to “drastically” change their rate outlook for 2024.Officials announced last Decemberquarterly economic forecastAt the median, the main policy rate, the federal funds rate, was expected to be 4.6% at the end of 2024.
“All but a few members of the FOMC believe that it would be appropriate to cut interest rates by the end of this year and begin to unwind the pro-cyclical stance,” the chairman said. “It’s certainly a basic scenario. We’re trying to get the timing right, given the overall context.”
Addressing the general public
At the FOMC meeting held on the 30th and 31st of last month, the US financial authorities had just decided to keep the policy interest rate at the highest level in 22 years, so this interview will be an opportunity for the chairman to address the general public. While authorities are firm on ending their aggressive rate hike campaign, they have signaled they are in no rush to cut rates.
Inflation has slowed significantly in the past few months, but Powell has repeatedly stressed that the Fed needs to see more data before starting to cut rates. At a press conference on the 31st, the chairman indicated that there was little chance of an interest rate cut in the January-March period (first quarter).
The personal consumption expenditure (PCE) composite price index, which the U.S. financial authorities focus on as an inflation indicator, rose 2.6% year-on-year in December last year, significantly slowing from 7.1% in mid-2022. This remains above the authorities’ target of 2%, while the labor market remains strong. The U.S. Department of Labor announced on the 2nd that the unemployment rate for January remained at a historically low level of 3.7%, and the number of non-farm payrolls increased by 353,000 from the previous month.
This year’s policy shift poses unique challenges for the U.S. Federal Reserve. Growing dissatisfaction among Americans over rapidly rising prices has weighed on President Biden’s approval rating in public opinion polls, and Chairman Powell and the financial authorities have become embroiled in the politics of a presidential and congressional election year. There is. If the Federal Reserve begins lowering interest rates this year, it could draw criticism from Republicans who say it is a move to boost the economy ahead of the election and give Democrats an advantage.
Meanwhile, Democratic senators including Chairman Brown of the Senate Banking Committee and Senator Warren sent letters to Chairman Powell last week, calling for rate cuts. Meanwhile, former President Trump, who is leading the race for the Republican nomination for the November presidential election, told the FOX Business Network on the 2nd that he has no intention of reappointing Chairman Powell if he is elected. Trump nominated Powell as chairman in 2017.
The chairman emphasized that the financial authority does not take politics or elections into account when making policy decisions. Repeating his past statements, he said “we would never do such a thing and we never will” and that “credibility is extremely valuable.”
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Original title:Powell Tells ‘60 Minutes’ Fed Is Wary of Cutting Rates Too Soon(excerpt)
2024-02-05 00:10:02
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