Powell Tells Congress: Fed in No Rush to Lower Rates

Federal Reserve Chair Jerome Powell reassured Congress on Tuesday that the central bank is in no hurry to lower interest rates, despite ongoing inflation and a solid labor market. Powell's remarks came as the Fed maintains its key rate in a target range of 4.25% to 4.5%, following a series of rate cuts in late 2024.



Powell's cautious approach aligns with the Fed's dual mandate of maximum employment and stable prices. The labor market remains in solid condition, with job openings slightly above the number of unemployed Americans seeking work, and the unemployment rate steady at 4% since the middle of last year. Inflation has eased significantly over the past two years, with total personal consumption expenditures (PCE) prices rising 2.6% over the 12 months ending in December, and core PCE prices rising 2.8%. Longer-term inflation expectations remain well anchored, as reflected in various surveys and measures from financial markets.



Powell acknowledged the uncertainty surrounding potential policy changes from the Trump administration, such as tariffs and immigration policies, which could introduce risks and uncertainties into the economic outlook. However, he emphasized that the Fed's interest rate is "well positioned to deal with the risks and uncertainties that we face."

The Fed's decision to maintain its current interest rate policy is based on the strength of the economy, solid labor market conditions, progress on inflation, and the need to monitor potential policy changes from the Trump administration. As these factors evolve in the coming months, the Fed will reassess its policy stance to best promote its maximum-employment and price-stability goals.

In conclusion, Powell's testimony to Congress underscores the Fed's commitment to its dual mandate and its cautious approach to interest rate policy. The central bank will continue to monitor economic data and assess the impact of potential policy changes from the Trump administration before adjusting its policy stance.