Powell Says Fed Doesn’t Need to Be in a Hurry to Lower Rates
Powell Says Fed Doesn’t Need to Be in a Hurry to Lower Rates · Bloomberg

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(Bloomberg) -- Federal Reserve Chair Jerome Powell said officials are not in a rush to lower interest rates, adding the central bank is pausing to see further progress on inflation following a string of rate reductions last year.

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“We do not need to be in a hurry to adjust our policy stance,” Powell said Wednesday, noting that the economy remains strong and interest rates are no longer restraining the economy as much as they had been.

The Federal Open Market Committee voted unanimously to keep the federal funds rate in a range of 4.25%-4.5%, after lowering rates by a full percentage point in the final months of 2024.

Strong economic growth coupled with a solid labor market allows officials to wait for further evidence of cooling inflation before adjusting rates again. It also offers them time to evaluate how President Donald Trump‘s policies on immigration, tariffs and taxes may impact the economy.

“The committee is very much in the mode of waiting to see what policies are enacted,” Powell said. “We need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be.”

When asked specifically about the potential for cutting rates at the Fed’s next meeting in March, Powell reiterated policymakers are not in a rush to lower borrowing costs. He stressed that the Fed wants to see “serial readings” suggesting further progress on inflation.

Taken together with comments from other officials in recent weeks, the remarks indicate the Fed could remain on hold for some time.

Treasury yields rose following the Fed’s decision, before retreating during Powell’s press conference. The S&P 500 closed lower.

Trump Criticism

The Fed’s latest decision came just over a week after Trump’s inauguration. Trump, a frequent critic of the central bank, has already suggested he understands interest rates better than Powell. The Fed chief told reporters he had not been in touch with the president and declined to comment on recent remarks Trump has made on rates.

Trump said in a post on Truth Social after the press conference that “Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it” through changes in energy production, regulation, international trade and manufacturing. He didn’t comment directly on interest rates or Wednesday’s decision.