MNI FED WATCH: Powell Shows Little Hurry To Cut Rates Further

Federal Reserve Chair Jay Powell indicated Wednesday the U.S. central bank is in no rush to lower interest rates further, saying that policymakers are waiting for a clear signal from mixed economic data following the first meeting without a cut since July. 

"We do think we are well positioned after the three cuts to let the data speak to us," Powell told reporters after the FOMC meeting. "We will be looking to our goal variables and letting the data light the way for us." 

Powell said he expects economic growth to be robust, pointing to labor market stabilization as a reason to pause. "If you look at the incoming data since the last meeting, clearly the outlook for growth, the Beige Book, everything comes in suggesting that this year starts off on a solid footing."

He said there was broad support among policymakers to hole interest rates steady, although Fed Governors Christopher Waller and Stephen Miran voted in support of a 0.25% interest rate cut.  

“We’re not trying to articulate a test for when to next cut or whether to cut at the next meeting,” Powell said. At the same time, "it is not anybody's base case right now that the next move will be a rate hike," said Powell. 

He said upside risks to inflation and the downside risks to unemployment have declined but still remain. "It's hard to say" they are fully in balance, but "we think our policy is in a good place." Estimates suggest tariff inflation will top out in the middle of the year, he said. 

Powell declined to comment on the recent sharp moves of the U.S. dollar, adding that the currency is in the Treasury Department's bailiwick. 

FED INDEPENDENCE 

Powell on Wednesday also emphasized the importance of the Fed’s independence, and expressed optimism that the central bank will keep that independence. 

"I think if you lose that ... it would be hard to restore the credibility of the institution," Powell said. "If people lose the faith that we are making decisions only on the basis of our assessment of what is best for everyone, for the wide public, rather than trying to benefit one group or another, if you lose that, it is going to be hard to regain it."

"And we haven't lost it. I don't believe we will. I certainly hope we won't, but it is very important. The reason it is important is it has enabled central banks generally not to be perfect, but to serve the public well." 

He declined to comment on a Department of Justice probe that was opened into his handling of a USD2.5 billion renovation of the central bank’s headquarters. 

Powell defended his decision to attend a Supreme Court hearing over Trump’s attempt to fire governor Lisa Cook.

"I would say that case is perhaps the most important legal case in the Fed's 113 year history, and as I thought about it I thought it might be hard to explain why I didn't attend," he said. "In addition, Paul Volcker went to a Supreme Court case famously in 1985 or so, so it is precedented. I thought it was an appropriate thing, and I did."

Asked what advice he would give to his successor, Powell said: "One is, stay out of elected politics. Don't get pulled into elected politics. Don't do it." 

"Another is, our window into democratic accountability is Congress," he said. "It is not a passive burden for us to go to Congress and talk to people. It is an affirmative, regular obligation."