2024-03-06 12:55:00 ET
Summary
- Fed Chair Jay Powell's testimony to Congress suggests an inclination to cut interest rates to a more neutral level.
- But with inflation still above target and the activity data beating expectations, the central bank isn't in a position to do so.
- More data is required, but with more evidence of a cooling jobs market, we still think they can cut rates from June.
Fed's Powell inclined to cut rates this year, but needs the data to justify it
There was nothing particularly surprising within Fed Chair Powell's prepared monetary policy testimony to Congress - which is pretty short in fairness - or the Q&A session. The main comments are that "the risks to achieving our employment and inflation goals have been moving into better balance", with a reiteration that Fed members "believe that our policy rate is likely at its peak for this tightening cycle"....
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The Fed Wants More Data Before Cutting, But A Cooling Jobs Market Will Help