Federal Reserve Chair Jerome Powell provided an update to Congress on the central bank’s stance on interest rates, indicating that the Fed is moving closer to feeling comfortable about potential rate cuts. Powell expressed optimism about the inflation outlook, pointing to evidence of cooler inflation and the need for more “good data” to strengthen confidence that inflation is moving sustainably toward the Fed’s target of 2%.
Powell emphasized the importance of making decisions on monetary policy based on a meeting-to-meeting basis, cautioning against lowering rates too quickly or keeping rates elevated for too long. He highlighted the Fed’s dual mandate of maximum employment and stable prices, noting that maintaining operational independence is crucial for the central bank to take a longer-term perspective in fulfilling its objectives.
As Powell prepares to address the House Financial Services Committee following his appearance before the Senate Banking Committee, he is expected to face pressure from Democrats advocating for rate cuts and Republicans emphasizing the importance of bank capital rules. The upcoming release of the Consumer Price Index data will provide further insight into the inflation trajectory, shaping the Fed’s future policy decisions in the pursuit of economic stability.
