Powell says Fed doesn't need to rush on rate cuts

Fed chair outlines paths for 2025: Hold rates if inflation doesn't improve or cut if economy slows more sharply

- Nick Timiraos

Federal Reserve Chair Jerome Powell delivered a simple message to Congress to start two days of testimony on Tuesday: Because the economy is doing well, the Fed can take its time to decide when and whether to lower interest rates.

"We're in a pretty good place with this economy. We want to make more progress on inflation. And we think our policy rate is in a good place, and we don't see any reason to be in a hurry to reduce it further," Powell told members of the Senate Banking Committee.

The central bank cut interest rates at its last three meetings of 2024 by a full percentage point after holding rates near a two-decade high. Powell defended last year's rate cuts as a needed recalibration of the Fed's policy stance to account for improvement on inflation and cooler labor market conditions.

Powell received minimal pushback from senators over recent interest-rate moves. That is despite criticism from some Republicans who last year accused the Fed of being politically motivated in cutting rates and some Democrats who said rates were too high.

One Republican lawmaker, Sen. John Kennedy of Louisiana, patted Powell on the back for achieving what is called a soft landing that has brought inflation down without a meaningful increase in unemployment.