Jerome Powell believes that the Federal Reserve’s next move on interest rates will be a cut. The Fed decided to keep its benchmark federal funds target steady at a range of 5.25 percent to 5.50 percent, but acknowledged that progress on inflation has stalled recently.
Powell stated that he does not expect the re-ignition of inflation to prompt a rate hike. He mentioned during a press conference after the Fed’s meeting that it is unlikely that the next policy rate move will be a hike. Powell stated that they would need persuasive evidence that their policy is not restrictive enough, which is not currently the case.
While the Fed is not considering rate hikes at the moment, they have adjusted their stance on the timing of rate cuts. Recent inflation trends indicate that cuts are not as imminent as previously thought.
Powell admitted that gaining greater confidence in this decision will take longer than expected. He also expressed less confidence in his previous forecast that inflation would decrease enough to warrant rate cuts this year.
