Jerome Powell, Chairman of the Federal Reserve (Fed), recently stated in an interview that a rate cut in March is unlikely. However, he also agreed that there may be a reduction in the restrictive stance at an appropriate time this year, suggesting that there could be three rate cuts in 2024.
During an episode of CBS “60 Minutes” aired on Sunday evening, Powell stated that the Fed will carefully observe the timing of rate cuts and officials hope to see more economic data to ensure sustainable achievement of the 2% inflation target.
Powell explicitly stated that it is unlikely for the FOMC to cool down inflation before the March meeting, echoing his stance at the press conference after maintaining the federal benchmark interest rate at 5.25% to 5.5% in early February.
When asked about the scale of rate cuts, Powell stated that he does not believe policymakers’ rate predictions for this year will change “significantly”. According to Fedwatch dot plot data from December last year, officials expected the federal funds rate to be between 4.5% and 4.75% by the end of 2024, indicating the possibility of three rate cuts by the Federal Reserve in 2024.
HSBC Bank also predicted at a financial investment strategy sharing event held last week that there will be three rate cuts in the US this year, starting from June with one cut in the first quarter, each cut being 2 basis points, and an additional three cuts next year, each cut being 1 basis point.
Due to data released by the US Bureau of Labor Statistics on the 2nd of this month, which showed that despite the pressure of high interest rates, the US job market remains stronger than market expectations. Non-farm payrolls increased by 353,000 in January, far exceeding the expected 185,000 and the revision of December’s employment figures from the previous 216,000 to 333,000.
The strong non-farm payroll data suggests that the Federal Reserve may need to maintain high interest rates for a longer period of time, leading to a decrease in rate cut expectations for March.
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