Hoping for rate cuts? Message from Jerome Powell isn’t promising

Bloomberg
The Nightly
3 Min Read
WASHINGTON, DC - JUNE 14: U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee (FOMC) at the headquarters of the Federal Reserve on June 14, 2023 in Washington, DC. After a streak of ten interest rate increases, Powell announced that rates will remain steady and unchanged. (Photo by Drew Angerer/Getty Images)
WASHINGTON, DC - JUNE 14: U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee (FOMC) at the headquarters of the Federal Reserve on June 14, 2023 in Washington, DC. After a streak of ten interest rate increases, Powell announced that rates will remain steady and unchanged. (Photo by Drew Angerer/Getty Images) Credit: Drew Angerer/Getty Images

United States Federal Reserve Chair Jerome Powell is expected to double down on his message that there’s no rush to cut interest rates, especially after fresh inflation data showed that price pressures persist.

Powell is headed to Capitol Hill, where he’ll deliver his semiannual monetary policy testimony to a House committee on Wednesday and a Senate panel on Thursday.

The US central bank chief and nearly all of his colleagues have said in recent weeks that they can afford to be patient in deciding when to cut rates given underlying strength in the US economy.

Sign up to The Nightly's newsletters.

Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.

Email Us
By continuing you agree to our Terms and Privacy Policy.

The “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading,” Powell said in an interview with CBS’s 60 Minutes on 5 February.

That cautious approach has been validated in recent weeks by data showing inflation picked up last month.

But it’s not likely to satisfy Democrats, who are anxious about how the path of rates could affect the November presidential election and down-ballot races.

They’re expected to press the Fed chief on why officials are keeping borrowing costs so high, risking damage to the economy, when they’ve made so much progress on inflation.

The data highlight for the week will be the monthly jobs report on Friday.

Economists project payrolls growth moderated in February to 200,000 following a 353,000 surge a month earlier that was the largest in a year.

The jobless rate is seen holding at 3.7 per cent, while hourly earnings growth probably cooled.

On Wednesday, the Fed will issue its Beige Book survey of regional business contacts from across the country.

Other data in the coming week include separate February surveys of purchasing managers at service providers, as well as figures on the January trade balance and job openings.

Elsewhere, other political set-piece events from China’s National People’s Congress to the UK budget will draw attention, as will rate decisions in the euro zone and Canada that are expected to show no change.

Asia

The National People’s Congress in China will be at the centre of attention in Asia as investors, economists and policymakers watch for signs that Beijing is prepared to take more significant stimulus measures.

China’s growth target for the year may also offer clues on how aggressively the country’s leadership will pursue a recovery.

The latest price data and cumulative trade figures for January and February will indicate how severe China’s slide into deflation is becoming, as well as the lack of major support for the economy via exports.

February inflation figures for Tokyo are likely to show a strong uptick as the impact of subsidies a year ago fades, an outcome that could fuel bets on a March rate hike from the Bank of Japan at a time when the labor market has tightened.

Board member Junko Nakagawa will provide the latest signaling from the central bank on Thursday.

Economists in Australia will fine-tune their growth forecasts on Tuesday after current account data comes out. Gross domestic product is due the following day, with tepid growth expected to continue.

Growth figures for South Korea are likely to stay largely unchanged after a revision, but consumer prices are expected to heat up again in data due on Wednesday.

Malaysia is expected to keep rates unchanged at 3 per cent on Thursday.

Latest Edition

The front page of The Nightly for 15-04-2024

Latest Edition

Edition Edition 15 April 202415 April 2024

Justice Lee finds Lehrmann ‘hell-bent on having sex’ with Higgins and ‘didn’t care if she knew what was going on’