WASHINGTON–Federal Reserve Chairman Jerome Powell said the strength of the economy is giving the central bank flexibility to be patient when it comes to cutting rates.
As CUToday.info has reported and every credit union CFO is aware, the Fed aggressively raised interest rates from early 2022 through mid-2023, with the Fed funds rate having remained at approximately 5.3% since July of last year as it attempted to tame inflation.
This year has been filled with predictions over when the Fed will move to reduce rates, including by credit union economists. But inflation has been more stubborn than many had forecast, and most now say it will be June at the earliest before the Fed makes any move.
Last week, a new report showed inflation in February was 2.5%, far below the 7% peak seen in 2022 and closer to the Fed’s 2% target.
In an interview last week with the National Public Radio’s Marketplace program, Powell said, “We can, and we will be, careful about this decision — because we can be. The economy is strong: We see very strong growth.”
‘Don’t Need to be in a Hurry’
As Powell noted, even with the higher rates consumers have continued to spend and employment has remained strong.
“That means that we don’t need to be in a hurry to cut,” Powell said. “It means we can wait and become more confident that, in fact, inflation is coming down to 2 percent on a sustainable basis.”
As CUToday.info reported earlier, the Fed indicated following its most recent meetings that it will look to reduce rates three times in 2024, a quarter-point a time. Powell said the Fed is paying particular attention to the labor market.
‘Something We Would Look at Carefully’
“If we were to see unexpected weakness in the labor market,” Powell told Marketplace, “then that’s something we would be looking at carefully, and could draw a response as well.”
Powell said he sees no indicators of a financial downturn. “There’s no reason to think that the economy is in a recession or is at the edge of one,” Powell said, before adding, “But, humility.”
Now With Free Shipping! The CUToday.info Daily News Email Keeps Getting Better!
The biggest, best and freshest news reporting in credit unions remains free, and now has an added bonus---free shipping to your email address! That’s right. Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more. So stop paying those bank-fee-like subscription prices from other so-called “news” publications!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?