What did Chairman Powell tell 60 Minutes last night? Basically, there’s no rush to cut interest rates at this time but they’re not going to wait to achieve 2% inflation target before cutting.
He also said commercial real estate woes are concentrated in a few regional banks but don’t represent a systemic risk like in 2008.
On the potential of a soft landing and the strength of the US economy, Chairman Powell noted:
“It’s historically unusual,” Powell said of rates falling without an economic downturn. “I would say there’s always a possibility of a recession at any given time. But I wouldn’t say that that possibility of a recession isn’t all elevated right now.”
Powell struck an optimistic tone on the overall state of the economy. “The economy’s strong. The labor market’s strong. Inflation’s coming down. There’s no reason why that can’t continue,” he said.
But the Fed Chair also noted that many Americans continue to feel the pinch of still-high grocery prices and inflated rents.
“If you think about the basic necessities, things like bread and milk and eggs and meats of various kinds, if you look back, prices are substantially higher than they were before the pandemic,” he said. “We think that’s a big reason why people have been relatively dissatisfied with what is otherwise a pretty good economy.”