Fed head Powell: A March Federal Open Market Committee (FOMC) rate cut is unlikely

Federal Reserve Chair Powell:

  • With economy strong, we feel we can approach rate cut timing
    question carefully
  • Confidence is
    rising, but want more confidence before taking ‘very important step’
    of starting rate cuts
  • Making good progress
    on inflation
  • Could move sooner if
    we saw labor market weakness or inflation ‘really persuasively’
    coming down
  • More persistent
    inflation could mean a later move
  • Repeats expectation
    that March meeting likely too soon to have confidence to start rate
  • There is no ‘easy,
    simple, obvious path’
  • Expects inflation
    will continue to move down in the first six months of this year due
    to base effects
  • Also expects
    12-month inflation readings to fall over course of this year
  • Asked about
    policymaker forecasts in December for year-end rate policy level of
    4.6%, says nothing since then leads me to think people would
    dramatically change forecasts
  • Almost all 19
    policymakers see it appropriate to cut rates this year
  • We do not take
    politics into our decision making
  • In hindsight would
    have been better to tighten policy earlier
  • Doesn’t see elevated
    possibility of recession
  • Doesn’t see
    commercial real estate loans as the makings of a crisis as seen in
    the past
  • China problems
    unlikely to affect US economy, may feel some impacts ‘a bit, but they
    shouldn’t be large’
  • Geopolitical risks
    stand as largest near-term risks, but more for other parts of world
    than the US

I don’t see much, if anything, new from Powell here. He is repeating what he has already said.

The interview was recorded February 1 and has just gone to air

S&P 500 futures on Globex update. With nothing much new does it open the door for a bid to emerge. Tha would be my bias from here but we’ll see.

This article was written by Eamonn Sheridan at www.forexlive.com. Source