Darrell Cronk, chief investment officer of Wells Fargo’s Wealth and Investment Management division, said April’s labor report was exactly what the Fed wanted to see in “making money.”
Chairman of the Federal Reserve System Jerome Powell He reiterated Tuesday that the central bank will be patient and wait for evidence of slowing inflation before cutting rates.
Powell said in a panel discussion in Amsterdam that recent inflation data, which have been better than expected since the start of the year, means it will take longer than previously thought to gain the confidence needed to begin easing monetary policy. He said it was suggested.
“We didn’t expect this to be a smooth road, but I think it’s been higher than anyone expected,” he said. “What this tells us is that we need to be patient and make restrictive policies work.”
High interest rate: ordinary deposit interest rate
Federal Reserve Chairman Jerome Powell holds a press conference at the end of the two-day Federal Open Market Committee meeting at the Federal Reserve Board in Washington, DC, March 20, 2024. (Photo by Mandel Gunn/AFP via Getty Images/Getty Images)
He said he expected inflation to ultimately continue to cool further, but warned: “Looking at these numbers for the first three months of the year, that confidence is not as high as it was.”
Still, Powell said that’s still unlikely. Fed will need to raise interest rates Even if the outlook for interest rate cuts is bleak, further interest rate cuts are still possible.
“Based on the data we have, I think it’s unlikely that our next move will be to raise rates,” he said. “It is likely that…we will keep the policy rate where it is.”
Home prices soar to new record highs in February
Chairman Powell’s comments come as the Department of Labor announced that the Producer Price Index (Producer Price Index) Inflation at the wholesale level In April, until it reached consumers, it rose 0.5% from the previous month. On an annual basis, prices are still up 2.2%, the highest level since April 2023.
Inflation has fallen significantly from its peak, but progress since the summer has been roughly flat. The Fed’s preferred indicator shows inflation running at a pace of 2.7%, well above the central bank’s 2% target. Excluding food and energy, underlying core inflation rose further to 2.8%.
A woman shops for groceries at a supermarket in Monterey Park, California, on October 19, 2022. ((Photo Credit: FREDERIC J. BROWN/AFP via Getty Images) / Getty Images)
Policymakers have significantly raised interest rates in 2022 and 2023 to their highest levels since the 1980s, slow down the economy And cool inflation. Officials are now wondering when to take their foot off the brake.
Most investors now expect the Fed to begin cutting rates in September or November, with only two rate cuts this year. This is a dramatic change from the beginning of the year, when we expected six rate cuts to begin as early as March.
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Rising interest rates tend to increase interest rates on consumer and business loans, forcing employers to cut spending and slowing the economy. Rising interest rates have pushed the average interest rate on a 30-year mortgage above 8% for the first time in decades. Borrowing costs for everything from home equity lines of credit to auto loans and credit cards have also skyrocketed.
