No hurry to cut interest rates, US Fed Chair indicates
Mar 30, 2024
New York [US], March 30 : The US Federal Reserve on Friday indicated that it was not in any hurry to cut interest rates.
In his address at an event hosted by the San Francisco Fed on Friday, US Fed Chair Jerome Powell said "We don't need to be in a hurry to cut."
Powell further added that strong employment data is buying the central bank more time to wait until inflation gets closer to 2 per cent, reported CNN.
The US Fed chair also raised concerns on cutting rates too early.
"If we reduce rates too soon, there's a chance that inflation would pop back and we'd have to come back in and that would be very disruptive (to the economy)," he said.
On Friday CNN had reported that the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures price index, was up 2.5 per cent for the 12 months that ended in February, a faster pace than January's 2.4 per cent rise in prices.
In his address, Powell recognised the risks of leaving rates at their current levels.
"This is an economy that doesn't feel like it's suffering from the current level of rates," Powell said.
The US Fed is trying to balance two risks: On one hand, officials do not want to keep interest rates too high for too long, risking an unnecessary recession. On the other, they do not want to cut interest rates too early, before inflation is fully under control, reported the New York Times.
Meanwhile in India, the RBI Monetary Policy Committee (MPC) is set to kick start its three-day meeting deliberating interest rates and analysing the state of the economy on April 3 and will end on April 5.
The callendar of meetings for the MPC was released by the RBI on Friday. The MPC meeting scheduled for April 3 will be its first meeting after the new financial year FY2025 kick starts from April 1.
Most market anaylysts have predicted that the Central Bank will maintain a status quo on rates.
