Powell reiterates wait-and-see stance, does not rule out the possibility of a rate cut in July 🔥🔥🔥🔥
Federal Reserve Chairman Powell reiterated on Tuesday that stable economic activity allows the Fed to conditionally wait and observe the impact of tariff increases on prices and economic growth before deciding whether to restart rate cuts. "We just need some time," Powell said at the European Central Bank meeting in Portugal, "As long as the U.S. economy is doing well, we believe the prudent course is to wait and further understand what these impacts might be." This meeting brought together leaders of central banks from Europe, America, and Asia.
In recent weeks, investor expectations for at least two rate cuts by the Fed in the second half of the year have heated up, as inflation data for April and May were milder than some economists had expected. However, Powell refused to make predictions about the Fed's meeting at the end of the month, stating that the economic outlook will determine decisions.
Powell stated that it cannot be asserted whether a rate cut in July is premature. He said, "I would not rule out the possibility of any meeting (for a rate cut), nor would I definitively state that a specific meeting will take action."
Following these remarks, financial markets increased bets that the Fed may begin cutting rates as early as this month. Short-term interest rate futures show that the probability of a rate cut at the July meeting is about one-quarter, up from previously less than one-fifth.
