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Powell: Too Early to Talk Rate Cuts

The Federal Reserve will need to see more evidence of waning inflation before it will cut interest rates, Chair Jerome Powell said Wednesday, according to UPI.

What’s going on: “In prepared opening remarks [to the House Finance Committee], Powell said the Fed ‘does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.’”

  • If the economy stays on its expected path, the Fed will likely “begin dialing back policy restraint”—though the outlook is uncertain, he added.

Good signs: The U.S. economy grew at a stronger pace in the past year, Powell told the House.

  • Gross domestic product rose 3.1%, “boosted by solid consumer demand and improving supply conditions.”
  • And while the labor market is still tight, supply and demand are coming “into better balance,” he continued.

Hinging on jobs: Friday’s jobs report will give a better idea of whether to expect rate cuts, according to the article.

  • “A continuing hot jobs market would likely prompt the Fed to hold interest rates steady, while a significant weakening of the jobs market could lead to cuts.”
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