Powell Sticks With Fed's Cautious Rate-Cut Strategy

• Federal Reserve officials, including U.S. central bank chief Jerome Powell, on Wednesday continued focusing on the need for more debate and data before interest rates are cut, a move financial markets expect to occur in June.
• "Recent readings on both job gains and inflation have come in higher than expected," Powell said in a speech to the Stanford Graduate School of Business, and while policymakers generally agree rates can fall later this year, that will only happen once they "have greater confidence that inflation is moving sustainably down" to the Fed's 2% target.
• His remarks repeated the language the Fed has adopted as it tries to balance the risks of cutting interest rates before inflation is truly controlled with the risks of suppressing economic activity more than is needed.
• As he did at his press conference at the end of the Fed's last policy meeting on March 20, Powell maintained the baseline outlook that rates will fall "later this year," and said that recent data did not "materially change the overall picture which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2% on a sometimes bumpy path."
• However, he hasn’t hinted at when the Fed might loosen its grip on credit, with upcoming jobs data, including the March nonfarm payrolls report on Friday, and incoming inflation readings next week, important in shaping the outlook for the central bank's April 30-May 1 and June 11-12 policy meetings.
• "Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy," Powell said, with decisions made "meeting by meeting.

(Source: Reuters)