Federal Reserve Chairman Jerome Powell on Sunday said that the strength of the economy allows the Fed to be “careful” in deciding when to cut interest rates.
“With the economy strong…we feel like we can approach the question of when to begin to reduce interest rates carefully,” Powell said, in an interview aired on CBS News’ “60 Minutes.”
The Fed chairman stressed the central bank is “actively considering” when to go forward cutting rates and wouldn’t wait until inflation got back down to the 2% target.
“My colleagues and I are trying to pick the right point at which to begin to dial back our restrictive policy stance,” Powell said. “That time is coming.”
Last week, the Fed policy statement said the central bank wanted to be more confident that inflation is moving down toward its 2% target.
Powell later told reporters that it was unlikely that the committee would reach that level of confidence by the time of the March meeting, which is in seven weeks.
He repeated those comments in the interview.
A March rate cut “is not the most likely or base case,” he said.
Powell noted that only “a couple” of the 19 top Fed officials don’t want to cut interest rates at all this year.
That means there is overwhelming support for cuts.
“And so, it is certainly to base case that we will do that,” Powell said. “We’re just trying to pick the right time, given the overall context.”
After the strong job report Friday, traders in derivate markets see over a 70% chance that the first rate cut is in early May. They foresee five quarter-point rate cuts this year.