Powell: "No Rate Cut in March"... Expectations Dashed

"Inflation Decline Needs More Observation"
Concerns Over US Presidential Election Impact, "Fed Is a Non-Political Organization"

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), expressed a cautious stance on the prospect of interest rate cuts this year. He assessed that the possibility of an early rate cut in March is low and emphasized that the Fed wants to gain more confidence through additional data.

On the 4th (local time), Chairman Powell appeared on CBS's "60 Minutes" and stated, "I want to see more evidence that inflation is consistently falling to 2%. Before taking significant steps to start cutting rates, I want to have more confidence."

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed)
[Photo by Yonhap News]

This aligns with the message Powell conveyed during the press conference immediately following the January Federal Open Market Committee (FOMC) regular meeting held on the 31st of last month. At that time, he said, "We are confident that inflation is steadily slowing toward the 2% target, but we need greater confidence," drawing a line under expectations for a rate cut in March.

He again dismissed the possibility of an early rate cut. Powell stated, "We need to be confident that inflation will fall to 2%, and I think it is unlikely that we will reach that level before the March meeting, which is seven weeks away." He also mentioned, "The time for rate cuts is approaching, but it may not be yet."

When asked about the specific timing of a rate cut, he avoided a direct answer, saying, "It will depend on the data." He added, "We compare the risks of moving too quickly versus moving too late and make real-time judgments. Based on what we expect, I want to say that the time is approaching." Cutting rates too quickly could cause inflation to rebound or stall above the 2% target. On the other hand, moving too late could put pressure on the labor market.

Regarding the outlook for inflation fluctuations going forward, he responded, "I expect it to continue falling in the first half of this year."

Meanwhile, with the U.S. presidential election scheduled for November this year, there are concerns that political factors could influence the Fed's decisions. Powell stated, "The Fed never considers politics when making decisions," adding, "The Fed is a non-political organization, and if it incorporated political factors into its decisions, it would lead to negative economic outcomes."

This content was produced with the assistance of AI translation services.