Jerome Powell Speaks Again on Rate Cuts

Just now Powell appeared infront of the House Financial Services Committee, reiterating yesterday’s comments on the current path of USA’s path to economic stability.

In his words it is still early to reach a decision on potential rate cuts, since the Fed needs more conclusive data.

Officials accuse the Fed of being to politicized, despite the instutition’s supposed impartial position.

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According to congresswoman Maxine Waters, the housing market is the biggest threat to inflation. She pointed out that acording to statistics, 30% of american’s income goes to housing.

If the Federal Reserve doesn’t time their decision right, it may lead to significant economic challenges. Whether they delay their decision too much, or act in a hasty manner, their work toward lowering inflation could have been for naught.

The jobs market is one of main indicators as to where the economy is headed. The other indicator we should pay attention is the Consumer Price Index (CPI), which will come out on Thursday (July 11) at 08:30 (ET).

It is expected that the CPI will have increased by 0.1% on a monthly basis in June after remaining flat in May.

Although Powell gave no hints, investors are expecting a rate cut in September and potentially one more in December.

Many politicians state that Fed’s policies are being too protective of banks, rather than the people and that a rate cut should be done sooner than later.

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Powell said that he is currently carefully watching for signs of weakness both in the job market and in the broader economy.

He states that they remain focused on their dual mandate to promote maximal employment and stable prices.

In conclusion, the reason for the lack of confirmation for a potential rate cut is the data from the first half of 2024, which doesn’t conclusively show that inflation is sustainably headed to the target ot 2%.