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BofA after Powell’s testimony: June still ‘reasonable’ for the first rate cut


BofA after Powell’s testimony: June still ‘reasonable’ for the first rate cut By Investing.com

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AuthorVahid KaraahmetovicStock Markets

Published Mar 07, 2024 05:28AM ET

© Reuters. BofA after Powell’s testimony: June still ‘reasonable’ for the first rate cut

During his Wednesday appearance before Congress, Federal Reserve Chair Powell maintained his previous views on the monetary policy outlook.

He emphasized that, should the economy progress as anticipated by the Fed, a reduction in policy rates later this year would be deemed appropriate.

Powell highlighted the Fed’s positive outlook on the economy’s capacity to grow while sustaining low unemployment levels and decreasing inflation rates.

Particularly, the US central bank’s chief acknowledged the strides made towards inflation reduction, expressing “some confidence” in inflation’s return to the 2% target.

He noted that “a little more evidence” would bolster their confidence further, clarifying that for the Fed to consider cutting rates, inflation data did not necessarily have to improve but needed to consistently align with current trends.

Weighing in on the matter, analysts at Bank of America said:

“Overall, we would not call Powell’s remarks dovish, but if his word choice was intentional then the bar to reducing rates does not appear exceptionally high. In our view, it is reasonable to keep June as the base case for the first policy rate cut.”

“Powell could have been more hawkish and emphasized concerns about a re-acceleration in the economy and inflation, which would have reduced the likelihood of a June start to the easing cycle,” they added.

Instead, the furthest Powell went in this context was to note the need for a “careful” evaluation of the economy’s resilience prior to any policy easing measures.

BofA after Powell’s testimony: June still ‘reasonable’ for the first rate cut

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