Fed Signals No Urgency in Cutting Interest Rates, Says Chair Jerome Powell

Federal Reserve Chair Jerome Powell emphasized a cautious approach to further interest rate cuts, citing a resilient economy, strong consumer spending, and low unemployment as reasons to avoid hasty monetary adjustments. Speaking at the Dallas Federal Reserve last week, Powell indicated that recent economic data did not warrant sharp rate reductions, despite two rate cuts in recent months.

Gradual Inflation Progress

Powell addressed inflation trends, noting that while core inflation for goods and services (excluding housing) has slowed significantly over the past two years, progress may remain gradual heading into 2025. “Core measures of goods and services inflation have returned to rates closer to those consistent with our goals,” Powell remarked. However, he warned that some upward movement in inflation is still possible in the near term.

Implications for the Housing Market

The Fed’s cautious stance could have mixed effects on the housing market. While higher rates might deter some buyers and slow market activity, steady rate levels can also provide a sense of predictability, which could benefit long-term investors and builders planning new projects.

Looking Ahead

With the Fed signaling a deliberate approach to monetary policy, market participants will likely focus on key economic indicators such as employment figures, consumer spending trends, and inflation data to gauge the timing of future rate cuts. Powell’s remarks highlight the balancing act the Fed must maintain between fostering economic growth and managing inflationary pressures.