Key Takeaways:
- Fed Chair Jerome Powell reiterated his cautious stance on any monetary policy changes during a Congressional hearing on Tuesday.
- This week, two Fed governors indicated that considering a rate cut in July might be appropriate.
- Interest rate indicators suggest September could see the next rate decrease.
U.S. Federal Reserve Chairman Jerome Powell provided limited updates during his recent testimony, reaffirming confidence in the economy’s stability, which allows the Fed to adopt a patient approach toward any monetary policy adjustments.
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” stated Powell in his prepared remarks for Congress.
Translation: “For now, we are adequately positioned to wait for further insight into the economy’s trajectory before making any policy changes.”
This testimony was particularly noteworthy due to recent comments from Fed Governors Chris Waller and Michelle Bowman, both of whom expressed support for a potential rate reduction at the Fed’s upcoming meeting. In contrast, Powell has shown no signs of favoring such a move at this time.
The divergence in viewpoints with Powell may not seem significant, but it coincides with President Trump’s ongoing criticism regarding the Fed chairman’s hesitance to relax monetary policies.
Currently, the probability of a rate cut in July is relatively low at just 18.6%, according to CME FedWatch. However, projections for September suggest over an 80% chance of one or more rate cuts.
An update on the Q&A session with the House committee will follow as new developments arise.
