Powell Keeps Rate Cuts on Table But Leaves Timing Less Certain

Federal Reserve Chair Jerome Powell kept hopes alive for an interest-rate cut this year while acknowledging that a burst of inflation has reduced policymakers’ confidence that price pressures are ebbing.

Powell, speaking to reporters Wednesday following the US central bank’s latest meeting in Washington, said price growth will likely resume cooling this year, but avoided offering a timeline for rate cuts.

Powell’s remarks reflected a broader shift in thinking at the Fed toward holding borrowing costs at a two-decade high for longer. That change in tune — first voiced last month — represented the culmination of several months of firm increases in inflation, hiring and consumer spending that has also led investors to pare back bets from roughly six rate cuts this year to just one.

“I don’t know how long it’ll take,” Powell said of when he and his colleagues might have the confidence to cut rates. “I can just say that when we get that confidence then rate cuts will be in scope, and I don’t know exactly when that will be.”

Policymakers left interest rates unchanged in a range of 5.25%-5.5%, where they’ve been since July. As recently as March, Powell said it would likely be appropriate to start cutting rates “at some point this year” — a phrase he didn’t repeat on Wednesday.

The Fed chief also established a high bar for further rate hikes, saying it’s unlikely that the next policy move will be a rate increase. Officials would need to see “persuasive evidence” that policy isn’t sufficiently restrictive to bring inflation down to their 2% target to consider raising rates again, Powell added.