Fed officials warn against cutting interest rates too soon
In recent days, the Fed Chairman has repeatedly indicated that an interest rate cut in March is highly unlikely, causing financial markets to reassess when they expect to lower interest rates.
A senior official of the US Federal Reserve (Fed) said on February 6 that it would be a "mistake" if the Fed started cutting interest rates too soon, despite recent progress in restraining interest rates. inflationary. The Fed quickly raised interest rates to their highest level in 23 years to bring inflation down to its long-term target of 2%.
Policymakers at the Fed signaled in late 2023 that they had begun negotiations on the right time to begin lowering the Fed's benchmark lending rate, sparking market optimism that The cuts could take place as soon as March 2024. However, in recent days, Fed Chairman Jerome Powell has repeatedly indicated that an interest rate cut in March 2024 is highly unlikely, causing financial markets to reassess when they expect start lowering interest rates.
On February 6, Cleveland Fed President Loretta Mester, who has the right to vote on the Fed's interest rate setting this year, joined with Chairman Powell to "pour cold water" on the market regarding speculations. Interest rates are about to be cut. Speaking at a conference in Ohio, Ms. Loretta Mester said that it would be a mistake to reduce interest rates too soon or too quickly without enough evidence that inflation is on a sustainable path and promptly returns to low levels. 2%. She said the Fed believes it is not the right time to start lowering interest rates until the agency "has greater confidence" that inflation is sustainably on track.
With a March 2024 rate cut now considered highly unlikely, futures traders have placed a 65% chance that the Fed will begin cutting, according to AFP analysis of data from CME Group. reduce interest rates at the next meeting on May 1. Ms. Mester said if the US economy continues to grow as expected, the Fed can confidently "start reducing interest rates" later this year./
