US Fed's Powell wants 'more confidence' before cutting rates

The news: US Federal Reserve chair Jerome Powell said the central bank's "confidence is rising" on inflation moving down to its 2% target, while the domestic economy's strong performance means they won't rush its decision on cutting interest rates.

The numbers: Speaking on CBS News' 60 Minutes, Powell said officials were trying to balance the risks of an economic slowdown caused by leaving rates too high for too long, and of cutting rates too soon. The central bank left interest rates unchanged last week, in the 5.25-5.50% range which has been unchanged since July 2023. It represents the highest level in more than 20 years, after the Fed raised interest rates 11 times in response to inflation.

The context: Last week the Fed reiterated it won’t cut rates until it has greater confidence that inflation has dropped toward its 2% inflation target. Powell told 60 Minutes that the strength of the US economy allows the central bank to take care in deciding when to cut interest rates.

What they said: Powell said: "The labour market is strong: 3.7% unemployment. With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully".