Two rate cuts possible this year
Fed Chair Powell: FOMC unlikely to cut rates when meeting at the end of this month
Fed Chair Powell said "more good data" would bolster confidence that inflation is moving toward the Fed's 2% target, with recent data showing "further modest increases" in prices. In testimony prepared for a Senate hearing on Tuesday, Powell warned that cutting rates too little or too late could put the economy and labor market at risk. "Rising inflation is not the only risk we face," he said. "Reducing policy constraints too late or too little could unduly weaken economic activity and employment and impede or reverse the inflation process." Powell's comments suggest the FOMC is unlikely to cut rates when it meets at the end of this month. Treasury yields swung but moved higher on the day, and the S&P 500 held gains after Powell's testimony. Traders are pricing in a slightly higher than 70% chance of the Fed's first rate cut in September. They expect two 25 basis point rate cuts in 2024.
