Brisk inflation and hiring data in January haven’t altered the Federal Reserve’s expectation that it will be appropriate to cut interest rates later this year, but Chair Jerome Powell said officials want more evidence that inflation is slowing, the Wall Street Journal reported. Rate cuts won’t be warranted until officials have “gained greater confidence that inflation is moving sustainably” toward the central bank’s 2% goal, Powell told the House Financial Services Committee on Wednesday during the start of two days of testimony on Capitol Hill. “We want to see a little bit more data so that we can become confident,” Powell said. “We’re not looking for better inflation readings than we’ve had. We’re just looking for more of them.” The recent strength of the economy and labor market “means that we can approach rate cuts carefully and thoughtfully,” he said. His comments did little to change expectations in interest-rate futures markets that the central bank will lower interest rates in June. Fed officials are trying to balance two risks: One is that they move too slowly to ease policy and the economy crumples under the weight of higher interest rates. The other is that they ease prematurely, allowing inflation to become entrenched at a level well above their 2% goal.
