Federal Reserve Chair Jerome Powell confirmed that the economy remains on track to avoid a recession and allow for interest rate cuts later in the year during a “60 Minutes” interview on CBS News.
“I do think the economy is in a good place, and there’s every reason to think it can get better,” Powell remarked. Although the notoriously guarded Fed leader displayed uncharacteristic optimism during the interview, the central bank ultimately decided to keep interest rates flat during their most recent meeting. January’s economy displayed surprising strength, gaining jobs as consumer prices retreated from record-breaking highs, suggesting that the government’s disinflationary efforts were taking effect. Nevertheless, Powell made it clear that interest rates were unlikely to come down until after March, when the Fed’s next meeting is scheduled.
During a news conference several days before his TV interview, the Fed chair stressed the importance of avoiding premature action. “It’s not that we’re looking for better data—it’s just that we’re looking for a continuation of the good data that we’ve been getting,” Powell stated. “We just need to see more.” U.S. gross domestic product (GDP) has exuded strength for several consecutive quarters. In the fourth quarter of 2023, GDP rose at an annualized rate of 3.3%, ahead of forecasts but slightly behind the previous period’s rate of 4.9%. According to the consumer prices index, the Federal Reserve’s preferred indicator for economic success, the pace of inflation dropped to 2.6% in December, within arm’s distance of the target pace of 2%.
In late 2023, Powell remarked that interest rate hikes were unlikely to return and expressed hope that cuts could be made in early 2024.