Powell exudes confidence about the economy. The Fed can wait to cut rates.
Subscribe to enjoy similar stories. As Jerome Powell’s term winds down as chair of the Federal Reserve, America’s central banker believes he is leaving the economy on “a firm footing." That suggests a lengthy pause in interest-rate cuts. As Powell explained at a press conference Wednesday, which followed the Jan.
27-28 Federal Open Market Committee meeting, monetary policy is now close to neutral, risks look more balanced, and there is little urgency to lower interest rates. Indeed, the FOMC held its benchmark rate steady at 3.5% to 3.75% in a 10-2 vote at the latest meeting, after lowering rates by three-quarters of a percentage point in last year’s second half. Fed Governors Christopher Waller and Stephen Miran dissented this week in favor of another quarter-point cut.
In the policy statement issued at the meeting’s conclusion, the FOMC described growth as “solid"—an upgrade from December’s description of expansion “at a moderate pace." The statement also said job gains remain low but the unemployment rate has shown signs of stabilization. The Fed dropped language that had pointed to rising downside risks in the labor market. Inflation, the committee said, “remains somewhat elevated." Powell, whose term ends in May, repeated that assessment to reporters.
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