Federal Reserve Chair Jerome Powell on Sunday hinted at the possibility of interest rate cuts in 2024, citing a strong economy and decreasing inflation.
What Happened: In an interview with CBS News 60 Minutes, Powell acknowledged the significant decrease in inflation over the past year. When asked “Is inflation dead?” Powell replied, “I wouldn’t go quite so far as that. What I can say is that inflation has come down really over the past year, and fairly sharply over the past six months. We’re making good progress. The job is not done and we’re very much committed to making sure that we fully restore price stability for the benefit of the public.”
He also highlighted the robust economy, with a 3.7% unemployment rate and decreasing inflation, as a factor in the Federal Reserve’s cautious approach to interest rate reduction. Powell emphasized the need for more positive economic data before making a decision on interest rates.
“We want to see more good data. It’s not that the data aren’t good enough. It’s that there’s really six months of data. We just want to see more good data along those lines.”
Why It Matters: Powell’s interview comes after the Federal Reserve left the interest rates unchanged last week between 5.25% and 5.5%. That was the fourth occasion on which the Federal Open Market Committee kept the borrowing costs steady.
Powell said afterward that he didn’t think that the committee would reach a level of confidence by the March meeting to decide the appropriate moment for a rate cut.
Bank of America revealed that it expects the Federal Reserve's first interest-rate cut of 2024 to happen in June, not March, following unexpectedly hawkish comments from the central bank.
Jeffrey Gundlach, the CEO of DoubleLine Capital, also expressed his concerns about the "Goldilocks" narrative and predicted an impending recession. Despite the market's previous confidence in the economy's resilience to the Fed's aggressive rate hikes, Gundlach believes that this optimism was unfounded.
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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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