It was stated that FED Chairman Jerome Powell will participate in CBS News’ 60 Minutes program this Sunday evening, US time, and will discuss inflation risks, expected interest rate cuts and the banking system, among other topics.
Here are the highlights from Jerome Powell’s speech at the program he attended:
- FED Chairman Powell said that FOMC interest rate forecasts have not changed since December.
- It seems unlikely that the FED will cut interest rates in March.
- Geopolitical risks are the biggest threat to the global economy.
- Good progress has been made, but the work is not done yet.
- The labor market remains very healthy.
- We’re not ready to say we’ve made a soft landing yet.
- Moving too quickly risks inflation rising above the 2% target.
- Basically, we want to see more good data. The problem isn’t that the data isn’t good enough. There is literally six months of data. We just want to see more good data along these lines. It doesn’t have to be better or as good as what we see. It just needs to be good. So we expect to see that. That’s why nearly everyone on the Federal Open Market Committee believes it would be appropriate for us to lower interest rates this year.
Question: Are you determined to reach 2% inflation before lowering interest rates?
Powell: “No, no. That’s not what we’re saying, no. We’re committed to getting inflation back to 2% over time. I said we wouldn’t wait until we get to 2% to cut rates. In fact, you know, we’re actively considering cutting rates right now and we’re looking at 12-month inflation.” “Basically, inflation, as you know, is not at 2%. It is between 2-3%. However, it is moving downwards, which will give us some relief.”
Question: Why is your target inflation rate 2%?
Powell: “Indeed, over the last few decades, central banks around the world, advanced economy central banks, have adopted a 2% target. Why not zero, I guess that’s the real question. And the reason is that interest rates always have a bearing on future inflation.” If it involves guesswork, the 2% target applies.
If that estimate is 2%, that means you can cut interest rates further by 2%. If interest rates are slightly higher, the central bank will have more ammunition and more power to fight a downturn. In any case, this has become a global norm. “It’s a pretty stable balance and it seems to serve the public well.”
CBS announced Powell’s participation in the program via social media platform X on Thursday, the day of the interview. Powell last appeared on the show in April 2021.
The FED, which did not change interest rates at its policy meeting earlier this week, is in the middle of a policy axis. It is moving away from the aggressive interest rate increases of the last two years and is entering a period in which it evaluates when it can reduce interest rates.
At the press conference held after the FED’s meeting on Wednesday, Powell said that it was unlikely that a rate cut would be made at the next meeting in March, as some market participants had predicted.
The FED President expressed optimism about the recently cooling inflation data, but said he was concerned that prices would not fully return to the central bank’s 2% target.
Powell, who holds eight press conferences a year after each Federal Open Market Committee (FOMC) meeting, often tries to reach Americans beyond financial markets to explain the central bank’s view of monetary policy and its goals. Powell participated in the 60 Minutes program in 2021 and touched upon the economic recovery from the recession caused by the Covid-19 epidemic.
*This is not investment advice.
