What Does Fed Chair Jerome Powell's Speech Mean? Will Interest Rates Continue to Stay High?

According to Nick Timiraos, a reporter generally considered the “Fed spokesman” by The Wall Street Journal, officials are not in a hurry to lower Fed interest rates because they are encouraged by the latest inflation data showing that price pressures are moderating towards the central bank’s 2 percent target.

Federal Reserve Chairman Jerome Powell said in his speech to Congress today that the US economy continues to remain strong, allowing policymakers to take a measured approach when deciding whether to lower interest rates. Previously, the Fed had cut interest rates by a total of three percentage points in the last three meetings of 2024, following a period of historically high rates.

In his prepared speech before the Senate Banking Committee, Powell said, "Since our policy stance is now much more supportive and the economy continues to remain strong, there is no need for us to rush to adjust our policy stance."

Powell defended last year's interest rate cuts, describing them as a necessary adjustment to align with improving inflation trends and cooling labor market conditions. He noted that new interest rate cuts could be considered in the event of an unexpected weakening of the labor market or inflation reaching the Fed's 2% target earlier than expected.