Fed’s ‘signal’ of executives to reduce interest rates soon

Eight months after increasing interest rates to high levels of two decades, the president of the US Federal Bank ( ) Jerome Powell and his colleagues are approaching to limit their fight for him, according to Bloomberg. In a statement to Congress last week, Powell stressed that Fed needs “a few more proof” that inflation is heading towards the 2% target before reducing loan costs. “We are not far from it,” he said. The Fed is widely expected to maintain the interest rates for a fifth consecutive meeting when policy makers gather on 19-20 March. Much of investor attention will focus on the Federal Open Market Commission’s quarterly projections for interest rates, including whether new employment and inflation data have caused changes. Should Fed officials record three reductions by a quarter of the unit for 2024, this will lay the foundations for a possible decline in June, as investors expect. Fed’s message in March will be: “Vincent Reinhart, head economist of Dreyfus and Mellon. They are not far from having the right amount of trust.” Policy makers unanimously voted to leave interest rates unchanged over a range of 5.25% to 5.5% in January and Powell and other Fed officials said a reduction in interest rates in March is unlikely. Partly the reason why officials can afford to take their time is because economic growth remains stable and the labour market continues to create a healthy number of jobs, including 275,000 jobs over forecasts in February. This report also included signs of continued moderation, with downward revisions of previous months’ earnings, a slowdown in wage growth and an increase in the unemployment rate over a high two-year period, at 3.9%. “The evidence probably pulled some air out of the danger of Fed having to delay and reduce the cut,” said Derek Tang, an economist for LH Meyer/Monetary Policy Analytics. “Powell’s assessment that “not far away” from the trust needed to make cuts remains intact”. The Fed will receive a key inflation rate before the meeting. The consumer price index likely remains persistently elevated to 3.1% compared to a year ago, according to economists interviewed by Bloomberg News. An upward surprise in January shook the central bankers and another surprise in February would have the ability to shift the view of Fed officials over the course of interest rates in 2024.

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