Federal Reserve Chairman Jerome Powell recently stated in an interview that it is unlikely for the Fed to lower interest rates in March. However, he also agreed that the Fed may reduce its restrictive stance at an appropriate time this year, suggesting the possibility of three rate cuts in 2024.
During an episode of CBS’s “60 Minutes” aired on Sunday evening, Powell emphasized that the Fed will carefully observe the timing of interest rate cuts and officials hope to see more economic data to ensure sustainable achievement of the 2% inflation target.
Powell also made it clear that it is unlikely for the Federal Open Market Committee (FOMC) to cool down inflation before its meeting in March, echoing his stance at a press conference in early February where he maintained the federal benchmark interest rate within the range of 5.25% to 5.5%.
When asked about the scale of rate cuts, Powell stated that he does not believe policymakers’ rate forecasts for this year will change “substantially.” According to the Fedwatch dot plot data from December last year, Fed officials predicted that the federal funds rate at the end of 2024 would fall between 4.5% and 4.75%. This implies that the Fed may cut interest rates three times in 2024.
HSBC Bank also predicted during a financial commodity investment strategy sharing session last week that there will be three rate cuts in the US this year, starting from June with one cut per quarter, each by 0.25%. They also estimated an additional three rate cuts next year, each by 0.25%.
Due to the release of data by the US Bureau of Labor Statistics on February 2nd, which showed that the strong performance of the US job market exceeded market expectations despite high interest rates, with a non-farm payroll increase of 353,000 in January, far surpassing the expected 185,000 and the revised 216,000 in December. The robust non-farm payroll data indicate that the Fed may need to maintain high interest rates for a longer period of time, leading to a further reduction in expectations for a rate cut in March.