Jerome Powell sees more rate cuts this year

WASHINGTON (AP) — Federal Reserve Chairman Jerome Powell, reinforced on Wednesday his belief that The US central bank will reduce its interest rate key this year, but first he wants to see more evidence that inflation is falling sustainably toward the Fed’s 2% target.

Powell noted that inflation in goods and services is slowing, and expressed no concern about the government’s latest inflation data, which showed some pickup in price growth in January.

Instead, he said that, according to the Federal Reserve’s preferred indicator, Inflation “has decreased significantly in the last year” although it is still above the Fed’s target.

His statements, in a prepared testimony that Powell will present on Tuesday and Wednesday before a commission of the House of Representatives, They reflected the message he expressed on January 31, in his most recent press conference. At the time, he said the Fed’s policy committee needed “greater confidence” that inflation was about to be brought under control before cutting its benchmark rate.

On the first of his two days of semiannual testimony before Congress, Powell also planned to note that The Reserve faces two almost equal risks: reduce rates too soon, which could “reverse progress” in reducing inflation, or reduce them “too late or too little,” which could weaken the economy and the labor market.

The effort to balance both risks is a change from the first months of last year, when the agency quickly increased its reference rate to combat strong inflation.

Los financial markets are anxious for guessing the moment of the Reserve’s first cut to its reference rate, which remains at around 5.4%, the highest in 23 years. A reduction in the rate will probably produce, over time, cheaper mortgages and other loans, such as auto, consumer and business loans.

Most of the Analysts and investors expect a first cut in June, although May is also possible. Fed officials, after their meeting in December, projected that they will cut rates three times this year.

In his statements on Wednesday, Powell gave no clues about the possible date of the cuts. For Wall Street traders, the probability of a cut in June is 69%, based on futures prices, up slightly from 64% a week ago.

Powell also stressed that Fed policymakers think the rate increases are sufficient, and that they are likely high enough to control the economy and inflation.