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- Jerome Powell reiterated Wednesday that the Federal Reserve would cut interest rates this year.
- The Fed says it wants inflation to cool more but doesn't need it to hit its 2% target to cut rates.
- The comments stand in contrast to hawkish commentary, with some forecasting no cuts in 2024.
Fed Chair Jerome Powell on Wednesday silenced the growing chorus of forecasters questioning the prospect of rate cuts this year.
He said the central bank was still on pace to lower interest rates in 2024 but waiting to see more data and a continued cooling of inflation before doing so.
"We will carefully assess the incoming data, the evolving outlook, and the balance of risks," Powell said during a Q&A with the House Financial Services Committee. "The committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%."
The S&P 500 reached intraday highs on Powell's remarks and closed up roughly 0.5% on the day.
Powell did say that inflation didn't have to fall all the way to 2% before the central bank would cut rates.
"That's not what we're looking for," he said. "What we want is more evidence that will give us more confidence that inflation is on the path down to 2%, sustainably."
Powell added that the "good" inflation readings the Fed expected didn't have to be better than previous data but that there needed to be more of them. That means all eyes are on the next consumer-price-index print, set for Tuesday.
"We don't want a situation where the six months of good inflation data we had last year that, that didn't turn out to be an accurate signal of where underlying inflation is," he said.
Powell's remarks contrast with some of the more bearish takes that have recently seeped into Wall Street chatter. Experts such as Torsten Slok have forecast no rate cuts may arrive in 2024. Some have even floated the possibility of a rate hike.