Federal Reserve Chair Jerome Powell testified in front of the Senate Banking Committee on Thursday, wrapping up a two-day appearance on Capitol Hill. The chair reiterated that the Fed will continue to review incoming inflation data and will most likely push back any rate cuts until the year’s second half.
The Wall Street Journal Chief Economics Correspondent Nick Timiraos joins Yahoo Finance to discuss Powell’s testimony and give insight into how the Fed balances its policymaking with political developments.
Timiraos explains that central bankers aren’t driven solely by hard metrics: “They can consult monetary policy rules, like a table rule, which would say you probably are where you need to be right now, but you might need to be cutting soon, so maybe they’re going off of that. You could go off an outlook or forecast if you think growth is going to slow more, which the Fed has had that in its forecast for quite a while, or you could go off of the data. In the past, the Fed has cut interest rates, because it sees something happening either in financial markets or in the economy that doesn’t look very good. I think what we’re all grappling with here, this could be a different situation.”
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