Powell insists the Fed will move cautiously on rate cuts, which will be less than the market expects

“We feel that because the economy is strong, we can carefully approach the question of when to start cutting interest rates,” he told the news magazine's Scott Pelley, according to a transcript released by CBS.

“We would like to see more evidence that inflation is moving steadily towards 2%,” Powell added. “Our confidence is increasing. We want a little more confidence before we take the very important step of starting to lower interest rates.”

As he did during Wednesday's news conference, he said the FOMC is unlikely to make the first move in March, which futures markets expect.

The meeting ended with the committee keeping its benchmark lending rate in the range of 5.25%-5.5%. In a post-meeting statement, the group said it would not cut “until there is greater confidence that inflation is moving towards the 2% target”.

Markets are aggressively betting on how much cuts the Fed will make this year. Current pricing points to five quarter-point cuts, although Powell defended the FOMC's December “dot plot” phase, which indicated three moves in individual members' estimates.

“We will update [the outlook] At the March meeting. I will say, though, that nothing has happened that I think will make people dramatically change their predictions,” he said, adding that the “time is coming” for cuts but not yet.

Powell was broadly optimistic about the economy, noting that inflation, while above the Fed's target, has moderated while the jobs market has been strong. The Labor Department said Friday that nonfarm payrolls rose by 353,000 in January. The biggest risk, he said, may come from geopolitical events.

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During the Fed's annual retreat in Jackson Hole, Wyoming in August 2022, Powell warned that policy tightening could cause “some pain” in the early days of the rate hike cycle. However, that was not the case, he said in an interview with “60 Minutes.”

“That's not really happening. The economy continues to grow strongly. Job creation is high,” he said. “It's really the pain that I'm worried about and a lot of people haven't had that. That's a really good thing. And we want that to continue.”

In another matter, Powell reiterated that neither he nor his colleagues would bow to political pressure in this presidential election year.

“We don't consider politics in our decisions. We never will. We never will,” he said.

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