Federal Reserve's Stance on Rate Cuts

Jerome Powell, the Federal Reserve Chair, made it clear on Wednesday that the central bank will not consider rate cuts until there is substantial progress on inflation or noticeable weakness in the labor market. Powell emphasized the importance of achieving the Fed's 2% inflation target and maximum employment, indicating that the current economic conditions are moving in the right direction.

Understanding the Fed's Policy Position

When questioned about the removal of the reference to inflation progress toward the 2% goal from the Fed's statement, Powell clarified that the change was not intended to signal any shift in policy. He highlighted the stability of labor market conditions over the past six months as evidence that the Fed's policy is appropriately calibrated.

Recent Inflation Trends

Powell pointed out that the inflation reports from November and December showed positive signs, marking two consecutive months of favorable readings. However, he cautioned against overinterpreting these results, suggesting that sustained progress is needed to confirm a trend.