Fed's Powell still expects rate cuts, but inflation prgrs "not.
WASHINGTON, March 6 (Reuters) - U.S. Federal Reserve Chair Jerome Powell, avoiding disputes over fiscal policy, energy, housing, Ukraine and other tangled issues, told U.S. lawmakers on Wednesday he and his colleagues would “keep our heads down” in a charged presidential election year, with interest rate cuts still likely in coming months but only if warranted by further evidence of falling inflation.
Rate cuts "really will depend on the path of the economy. Our focus is on maximum employment and price stability, and the incoming data as they affect the outlook, and those are the things we'll be looking at," Powell told the House Financial Services Committee. "We are just going to keep our heads down and do our jobs and try to deliver what the public is expecting from us."
Powell in his prepared remarks to the House panel said rate reductions will "likely be appropriate" later this year, "if the economy evolves broadly as expected" and once officials gain more confidence in inflation's steady decline.
Though nothing is guaranteed and progress on inflation "is not assured," Powell said, he regarded the economy as clear of immediate recession risks, with a low 3.7% unemployment rate and broad growth likely to continue, and an expectation that inflation will remain in decline.
"That's the economy that we're trying to achieve. We're on a good path so far to be able to get there," Powell said.
But the coming decision of when and how far to reduce the benchmark interest rate is both complex in an economy that is showing signs of continued disinflation but also unexpected strength, and consequential in the upcoming rematch between incumbent President Joe Biden, a Democrat, and Republican former President Donald Trump