Powell: We have time to wait for rate cut

Fed Chairman Jerome Powell said policymakers have time to wait to see if inflation falls further before cutting rates. Powell emphasized that the recent rise in inflation has not changed the outlook. Fed Chairman Powell made assessments on monetary policy in his speech at the Stanford Business, Government and Society Forum event. Powell stated that officials have time to see the course of inflation before cutting rates. Powell said that it is too early to say that the latest inflation data is more than a jump and that it does not significantly change the outlook, that growth is strong, that the labor market is strong but balancing, and that inflation is moving toward target despite the bumpy road. Powell said, “We do not foresee it appropriate to lower our policy rate until we have greater confidence that inflation will fall sustainably toward 2 percent. Given the strength of the economy and the progress in inflation to date, we have time to let incoming data inform our policy decisions.” Powell said that if the economy continues as expected, a rate cut is likely this year. The chairman added that the work of reducing inflation is not over yet. Emphasizing that the outlook is still very uncertain and that risks are faced on both sides, Powell noted that cutting interest rates too early or too much could cause inflation to reverse progress and require even tighter policies. Powell warned that easing monetary policy too late or too little could weaken economic activity and employment unnecessarily. Commenting on the upcoming elections and the independence of the Fed, Powell emphasized the importance of staying away from politics, saying, “Our analysis is independent of any political view or individual.” The Fed did not change interest rates at its meeting last month and maintained its expectation of 3 interest rate cuts this year.