Federal Reserve Chair Jerome Powell expressed doubt on the timeline for interest rate cuts this year due to lack of progress towards 2% inflation target.
Fed Vice Chair Philip Jefferson also suggested keeping rates higher if inflation proves more persistent than expected.
Inflation has not made significant strides towards reaching the goal with an annual rate of 3.5% in March.
The job market continues to grow at a surprising clip and the economy remains resilient despite higher interest rates.
Federal Reserve Chair Jerome Powell expressed doubt on the timeline for interest rate cuts this year during a panel discussion on U.S.-Canada economic relations, citing a lack of progress towards the central bank's 2% inflation target. The recent data shows solid growth and continued strength in the labor market, but inflation has not made significant strides towards reaching the goal.
In March, consumer price index data showed an annual rate of 3.5%, higher than expected and drifting away from the peak around 9% in mid-2023. Powell noted that recent data has not given him greater confidence that inflation is moving sustainably towards the target, indicating a more extended period of restrictive policy.
Fed Vice Chair Philip Jefferson echoed Powell's sentiment, suggesting keeping rates higher if inflation proves more persistent than expected. The Fed officials did not provide specific details on the timing or number of potential cuts this year.
The job market continues to grow at a surprising clip and the economy remains resilient despite higher interest rates. This allows the Fed to maintain its focus on reducing inflation without worrying about negative impacts on businesses' hiring abilities or people's employment prospects.
Fed watchers and financial markets have adjusted their expectations for rate cuts this year, with some questioning whether even one or two reductions will occur before late summer. The most optimistic scenarios do not include a cut before late summer.
The Dow snapped a six-day losing streak on Tuesday.
Federal Reserve chair Jerome Powell said it will likely take ‘longer than expected’ for the central bank to be confident in its inflation fight.
Accuracy
Inflation data for the first three months of 2024 has been higher than expected, with consumer price index running at a 3.5% annual rate in March.
Fed Chair Powell indicated that policy is likely to remain intact until inflation gets closer to target and recent data has not given greater confidence that this will happen soon
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, showed core inflation at 2.8% in February and little change over the past few months
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(95%)
The article contains some instances of inflammatory rhetoric and an appeal to authority, but no formal or dichotomous fallacies are present. The author uses phrases like 'higher-for-longer interest rate mantra' and 'it will likely take longer than expected' to describe the Federal Reserve's stance on inflation, which could be seen as inflammatory. Additionally, the author quotes Jerome Powell directly, making it an appeal to authority when stating that 'Federal Reserve chair Jerome Powell... said it will likely take longer than expected for the central bank to be confident in its inflation fight.' However, these instances do not significantly impact the overall quality of the article and do not detract from its informational value.
]The Dow snapped a six-day losing streak on Tuesday as investors digested a 'higher-for-longer' interest rate mantra from the Federal Reserve.[
']Federal Reserve chair Jerome Powell... said it will likely take longer than expected for the central bank to be confident in its inflation fight.[
Federal Reserve Chair Jerome Powell expressed doubt on when policymakers may cut interest rates this year due to lack of progress towards 2% inflation target.
Inflation reports during the first three months of the year showed progress had largely stalled.
Accuracy
Policymakers have raised interest rates sharply over the past two years, approving 11 rate increases in total.
Interest rates surged from near zero to above 5% in just 16 months, marking the fastest pace of tightening since the 1980s.
