Jerome Powell is the chair of the Federal Reserve and has overseen 11 interest rate hikes to cool inflation. While this raised concerns of a recession, inflation is now falling without a recession occurring.
Powell believes inflation has come down significantly but the job of reducing it to the 2% target is not done yet. More evidence is needed that inflation is sustainably falling before rate cuts.
The Fed aims to return inflation to its long-term 2% target to restore price stability for the public's benefit. Powell wants more confidence inflation will fall to 2% before cutting rates.
Powell sees the current economy as strong with solid growth and a low 3.7% unemployment rate, allowing a careful approach to rate decisions.
Inflation has fallen from over 9% to around 3% but Powell is not committed to getting it all the way to 2% before rate cuts, just wanting to see more good data.
Powell acknowledges the Fed was too slow to recognize inflation in 2021 and should have tightened policy earlier to curb price increases.
A rate cut is not likely at the next meeting in March but could occur by the May meeting if inflation data remains stable.
Future rate cuts would likely be quarter or half point decreases to support the economy without rekindling inflation.
Powell does not foresee a repeat of the 2008 banking crisis but some smaller regional banks may face challenges from commercial real estate declines.
Powell expresses concern over the unsustainable rising national debt burden on future generations.
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