Federal Reserve Chair Jerome Powell addressed House lawmakers on Wednesday, hinting at potential interest rate cuts in 2024. During his testimony, Powell also expressed willingness to make significant changes to a proposed rule requiring banks to hold more capital.
Despite expectations of three rate cuts this year, Powell stressed the need for more data before implementing any cuts. He emphasized getting bank regulations right over speed, potentially leading to a re-proposal of the rule in the future.
Lawmakers questioned Powell on various topics including housing, inflation, and the impact of artificial intelligence in financial services. The upcoming Fed policy meeting in two weeks is anticipated to keep rates steady, following the last rate hike in July 2023.
Higher-than-expected inflation readings have pushed back expectations for rate cuts to later in the year, with investors now predicting the first cut to be in June instead of March. The Fed faces the challenge of balancing inflation and economic growth, with the timing of rate cuts potentially impacting the presidential election in November.
Powell cautioned against lowering rates too soon, as it could jeopardize progress in controlling inflation. The economic outlook remains uncertain, leading to varied predictions on the number of rate cuts for the year, with some economists even suggesting no rate hikes in 2024.
As the Fed navigates these challenges, the financial markets will be closely watching for any new developments in the coming months. Stay tuned for updates on Bio Prep Watch as the situation continues to evolve.