Fed Chair Powell comments on interest rate cuts: 'Continued progress toward our goal is not guaranteed'

Federal Reserve (Fed) Chair Jerome Powell answered questions from members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs on the second day of his semi-annual Monetary Policy Report presentation to the U.S. Congress.

HE SAID THEY WOULD NOT WAIT

Powell stated that interest rates are currently at a quite restrictive level and noted that monetary policy operates with long and variable lags, which is why they will not wait for inflation to fall to 2 percent.

Reiterating that they are waiting to be more confident that inflation is moving sustainably toward the 2 percent target, Powell said, "When we do get that confidence, and we're not far from it, it will be appropriate to begin to dial back the level of restriction so that we don't drive the economy into recession."

HE HAD EMPHASIZED THIS BEFORE

Participating in a hearing held by the House Financial Services Committee on the first day of his presentation to the U.S. Congress, Powell had emphasized that they do not expect it will be appropriate to reduce the policy rate until they have greater confidence that inflation is moving sustainably toward 2 percent.

Stating that they believe the policy rate is likely at its peak in this tightening cycle, Powell had assessed, "If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. But the economic outlook is uncertain, and continued progress toward our 2 percent inflation goal is not guaranteed."