Fed Chair Powell: Right now, we’re in watch and wait mode

Federal Reserve (Fed) Chair Jerome Powell added further comments during his testimony before the congressional budget committee on Tuesday, building out his case for holding off on rate cuts, likely until sometime in the fourth quarter.

Key highlights

When the time is right, expect rate cuts to continue.
Data suggests at least some of tariff will hit consumer.
I think we’ll start to see more tariff inflation starting in June.
We will be learning as we go through the summer.
I’m perfectly open to the idea that tariff-inflation pass through will be less than we think.
We don’t need to be in any rush.
If it turns out inflation pressures are contained, we will get to a place where we cut rates.
I won’t point to a particular month.
The Fed just trying to be careful and cautious with inflation.
It’s uncertainty about the size and potential persistence of inflation from tariffs.
The economy is slowing this year. Immigration is one reason.
Shock absorber from US oil industry is in question now.
The Fed would look at the overall situation if oil prices surge.
The dollar is going to be the reserve currency for a long time.
I don’t think MBS runoff has a large impact on housing cost.
Once we get there, we can react more strongly to downturns in the economy.
I think the Fed is on right track in shrinking balance sheet.
The Fed has some shrinking left to do on balance sheet.
Credit conditions for small business a little bit tight.
We would expect to see meaningful tariff inflation effects in June, July or August.
If we don’t see that, that would lead to cutting earlier.
Right now, we’re in watch and wait mode.
Overall, the inflation picture is actually pretty positive.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.