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Powell Chills Investors, Says ‘I Don’t Think It’s Likely’ Rate Cuts Arrive In March, Stocks Sink (UPDATED)

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Editor’s note: This story has been updated with additional details from Fed Chair Jerome Powell’s press conference.

The Federal Reserve announced on Wednesday that interest rates will remain unchanged, meeting market expectations and signaling a pause in policy tightening.

Yet the Fed statement tempered expectations for imminent rate cuts, stating that “it won’t be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

Powell’s Message: Forget About March Rate Cut

At the press conference, Fed Chair Jerome Powell clearly stated that he believes it is unlikely that the committee will reach enough confidence by the March meeting to decide on the appropriate moment for a rate cut.

“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that,” Powell said.

Powell emphasized the decision to lower interest rates would not be based on a single instance of achieving the 2% inflation target, but rather on a consistent and sustained period of inflation remaining at that target level.

“We’re not looking for inflation to tap the 2% base once. We’re looking for it to settle out over time at 2%.”

Economy On Better Balance, But Too Early To Declare Victory

Despite the improvement in inflation, Powell emphasized the ongoing challenge, adding, “It’s still too high and ongoing progress in bringing it down is not assured and uncertain.”

The elevated price level is the key reason why confidence surveys have been weak at a time when unemployment has been low, he said. “People are going to the store and they’re paying much more for the basics of life than they were two years ago.

“We’re not declaring victory at all at this point. We think we have a ways to go,” he added.

Powell asserted the labor market remains tight but is balancing, with average payroll gains of 165,000 jobs per month and a low unemployment rate. Wage growth has been easing, and job vacancies have declined.

“Powell stated that that “i”If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this…

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