Win McNamee
Chairman Jerome Powell asserted during a “60 Minutes” interview on Sunday that the Federal Reserve, buoyed by the robust American economy, feels it is in a position to proceed cautiously with regards to adjusting interest rates.
experts anticipate that if the Federal Reserve were to reduce rates prematurely, it could precipitate inflation surpassing the target of 2%, Powell explained. However, a delayed adjustment could lead to a recession.
“Inflation has experienced a substantial decline,” he remarked. Powell emphasized that the central bank intends to wait for further confirmatory evidence of declining inflation prior to contemplating a loosening of its policy. These sentiments parallel those expressed by Powell at the recent press conference wherein the Fed maintained its policy rate within the range of 5.25%-5.50%.
According to Powell, it would have been preferable for the Federal Reserve to have tightened its policy expeditiously when inflation surged in 2021.
“The easing of inflation does not imply an overall reduction in price levels,” Powell clarified.
Addressing concerns about a potential crisis in commercial real estate, Powell dismissed fears of a banking crisis but acknowledged that some smaller banks may face collapse and be compelled to merge with others. Nevertheless, he categorically ruled out the likelihood of the current situation in the commercial real estate market causing a financial crisis akin to the one experienced in 2008.
Despite Powell’s indication of a forthcoming rate cut later in the year, he underscored that the Fed’s policy decisions remain uninfluenced by political considerations, emphasizing the central bank’s unwavering focus on economic data.