US economy

Jay Powell says Fed expects to make three rate cuts this year

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The Federal Reserve’s rate-setters still expect to make around three quarter-point rate cuts this year, its chair Jay Powell said in an interview that aired on Sunday.

Powell told CBS’s 60 Minutes show that “almost all” of the membership of the Federal Open Market Committee think the US central bank will cut rates from their current 23-year high of 5.25-5.5 per cent at some point over the course of 2024.

Rate-setters, on average, expected to make 75 basis points of cuts back in December. Powell said in an interview recorded on Thursday that, while new projections were not due out until March 20, “nothing has happened in the meantime that would lead me to think that people would dramatically change their forecasts.”

“If the economy were to weaken, then we could reduce rates earlier and perhaps faster,” he said. “If the economy were to prove — if inflation were to prove more persistent, that could call for us to reduce rates later and perhaps slower.”

Markets had been betting on six cuts, beginning in March. But Powell’s insistence last week that such an early move was unlikely, and a strong jobs report on Friday, quashed hopes of a move that early in the spring.

This is a developing story.


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