Federal Reserve Chair Jerome Powell, in his latest remarks, reinforced the central bank’s cautious stance on monetary policy, emphasizing that future interest rate decisions will remain highly data-dependent. While inflation has eased from its peak, Powell noted that progress remains uneven, and the Fed needs "greater confidence" that inflation is sustainably moving toward its 2% target before considering rate cuts.
Powell acknowledged strong economic growth and a resilient labor market, suggesting that the Fed can afford to be patient. However, he also warned that prolonged restrictive policy could pose risks to economic expansion. Markets interpreted his comments as less hawkish than expected, leading to a slight dip in Treasury yields and a modest stock market rally.
Analysts believe the Fed is likely to hold rates steady in the near term, with potential cuts later in 2024 if inflation trends downward. Powell’s remarks highlight the Fed’s balancing act—tackling inflation without derailing economic growth.