“We want to see more good data. It’s not that we’re looking for better data,” Powell said. He added later that a cut in March is “probably not the most likely case.”
“We need to see more evidence that sort of confirms what we think we’re seeing.”
The Federal Open Market Committe (FOMC) kept its baseline interest rate range at
5.25 to 5.5 percent after several months of strong economic data and slowing inflation.
The FOMC, the central bank panel responsible for setting monetary policy, said it was holding off on rate cuts “until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
While the FOMC said it was watching “a wide range of information,” the committee singled out conditions in the labor market, inflation expectations, and “financial and international developments.”
The Fed’s more cautious stance appeared to
spook financial markets, pushing all three major stock indexes into losses:
- S&P 500 index was down 1.5 percent.
- Nasdaq composite was down 2 percent.
Top Fed officials ended 2023 signaling that rate cuts were coming this year as long as inflation continues to fall. Inflation clocked in at 3.4 percent in December, according to the latest consumer price index (CPI), down significantly from its 9 percent peak in June 2022.
GDP growth and the job market have remained strong despite widespread predictions of a recession a year ago, although a series of high-profile layoffs this month could throw a wrench in the Fed’s forecasted “soft landing.”
The Hill’s Taylor Giorno has more here.
