Federal Reserve Chair Jerome Powell holds a press conference following the release of the Fed’s interest rate policy decision at the Federal Reserve in Washington, U.S., January 31, 2024.
Evelyn Hockstein | Reuters
Fed Chairman Jerome Powell said Wednesday that the central bank would likely not be comfortable enough with the path of inflation by its March meeting to cut interest rates.
“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that. But that’s to be seen,” Powell said.
The statement came in a press conference after the Fed’s January meeting, where the central bank left its benchmark interest rate unchanged. Powell did say earlier in the press conference that rate cuts would likely come at some point this year.
Stocks fell to their session lows following Powell’s comment on March as the Fed chief dashed hopes of traders who want the central bank to slash rates sooner before there’s a recession. The Dow Jones Industrial average lost as much as 250 points at one point.
The Fed’s policy statement released earlier Wednesday included several tweaks that suggested the central bank was taking further rate hikes off the table but not yet ready to cut. Powell’s comments appeared to clarify for traders that the stance would continue for at least one more meeting.
Powell also declined to commit to a series of rate cuts once the Fed makes its first move, saying that it “would depend on the data.”
The central bank’s next two policy decision dates are scheduled for March 20 and May 1. In recent months, traders and Wall Street strategists have focused on those two dates as likely candidates for the first rate cut, as inflation continues to fall and job growth slows.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is updated near the end of each month. There will likely be only one more PCE reading before the Fed’s March meeting, but three more before May.
There will also be three more federal jobs reports released before the May meeting, with the January report due out on Friday.