Written by Howard Schneider
WASHINGTON (Reuters) – A strong economy is giving central bankers time to be confident that inflation will continue to decline, Federal Reserve Chairman Jerome Powell said on CBS News. The Federal Reserve Board (Fed) said it may be able to “prudently” decide when to lower the benchmark interest rate. 60 Minutes” in an interview that aired Sunday night.
“The prudent thing to do is… to wait a little bit and see if the data confirms that inflation is sustainably coming down to 2%,” Powell said. The economy's current strength reduces the risk of a recession, and “we want to approach this issue cautiously,” he said, as policymakers wait for final data to persuade them to press ahead with rate cuts. Ta.
The interviews took place on Thursday, but Friday's big January jobs report showed companies adding 353,000 new jobs, with continued strong wage growth and an unemployment rate of 3.7%, little changed in two years. It shows that it has been added.
A sustained U.S. recovery amid declining inflation appears to be putting the Fed on the brink of what Chairman Powell characterized as a “historically abnormal” situation, with Powell saying a “soft landing” is almost certain. I refrained from making any statements.
In fact, he said the Fed is watching risks to both price stability and maximum employment obligations and will consider slowing job growth as a possible reason to accelerate rate cuts.
“We're focused on the real economy and doing what's right for the economy and the American people in the medium to long term,” Powell said. “We have to balance the risk of moving too soon or too late.”
“In a good location”
Covered intensely by financial news outlets around the world, the Fed chairman often appears on popular, widely watched shows like “60 Minutes'' to signal policy shifts or highlight major developments. May appear on. Mr. Powell did so early in the pandemic to reassure the public that central banks were supporting the economy.
In this case, the message was a positive one of lower inflation, strong employment, and easing credit conditions to come, but as the Fed contained the worst outbreak of inflation this year, All the “pain” I had been warned was in store for me was gone. 40 years.
“We think the economy is in good shape. We think inflation is coming down. We have a little more confidence that inflation is coming down sustainably toward the 2% goal,” Powell said. I just want to have it.”
The Federal Reserve's preferred measure of inflation, the Personal Consumption Expenditure Price Index, was running at an annual rate of 2.6% as of December, but has been below the Fed's target over short three- and six-month periods.
In a wide-ranging conversation, the Fed chairman reiterated many of the comments he made in a press conference last week after the Fed kept its benchmark interest rate unchanged at its current 5.25% to 5.5% range. This included the view that it was likely too early to begin lowering interest rates at the next FOMC meeting in March.
External shocks can always derail an economy, he said, citing the series of geopolitical crises the world is currently experiencing. But even some underlying economic issues, such as China's real estate problems and slowing growth, may have a smaller impact on the United States than expected.
“Our financial system is not deeply intertwined with their system…our production system is not deeply intertwined with theirs,” Powell said. “The impact on the U.S. may be felt a little bit, but it shouldn't be that big.”
Powell said that unless there are some unexpected developments, the start of rate cuts “really depends on the data.”
Asked about the outlook for Fed policymakers in December, who expected a three-quarter point rate cut by the end of the year, the chairman said: “Nothing has happened in a while to make me think people are going to dramatically change their expectations.'' said.
(Reporting by Howard Schneider; Editing by Chizu Nomiyama)
