Federal Reserve Chair Jerome Powell testified before congressional lawmakers, indicating that there is no rush to cut interest rates. This news comes as a challenge for Americans who may be hoping for financial relief in the near future.
Powell stated that there are unlikely to be any rate hikes this year and that the policy rate is likely at its peak for the tightening cycle. However, he did mention that rate cuts could still be a possibility if the economy continues to evolve as expected.
Despite this cautious approach, Powell assured lawmakers that there is no immediate risk of a recession in the US economy. Economic growth in the fourth quarter was at a robust 3.2% annualized rate, with consumer spending remaining strong.
Powell also highlighted potential risks, including the decline in property values for empty office buildings as more employees work remotely. Additionally, concerns were raised about the impact of proposed banking regulations known as Basel Endgame III, which could require banks to hold more capital.
Republicans on the committee criticized the proposed regulations, arguing that they could limit funds available for lending and potentially lead to higher interest rates. Powell acknowledged these concerns and mentioned that the final version of the Basel regulations will likely be different from the proposal, taking into account feedback from stakeholders.
Overall, Powell’s testimony reflects a cautious approach to monetary policy, with the Federal Reserve remaining vigilant about potential risks to the economy. This news may have implications for Americans who are closely monitoring interest rates and economic developments in the coming months.
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