HomeTop U.S. NewsFed Chair Jerome Powell Says More Evidence is Needed Before Rate Cuts

Fed Chair Jerome Powell Says More Evidence is Needed Before Rate Cuts

Speaking with reporters on Tuesday, Federal Reserve Chair Jerome Powell said that the U.S. central bank is satisfied with the fact that inflation is showing signs of cooling down. However, Powell pointed out that more evidence is needed before the Fed can start making rate cuts.

While making an appearance at the European Central Bank conference in Portugal, Powell said that the inflation readings for the past couple of months in the United States “suggest that we are getting back on a disinflationary path” compared to early 2024 when the inflation was heating up.

However, Powell added that the Fed wants to see inflation get closer to their preferred target of 2% in order to be comfortable lowering the interest rates. 

“We just want to understand that the levels that we’re seeing are a true reading of underlying inflation,” Powell shared.

Powell also acknowledged that the Fed needs to be cautious in determining its next steps. If the interest rates go down too soon, inflation could quickly heat up again. On the other hand, if they remain high for too long, there is a risk of weakening the U.S. economy and pushing it into recession.

Fed previously announced it is expecting one interest rate cut in 2024 compared to earlier predictions of three. The majority of analysts expect the Fed to make the first cut during its meeting in September.  

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