Fed Chairman Jerome Powell took command of the policy debate after several officials said they wanted to continue raising rates, giving a clear signal that he is on the verge of halting rate hikes next month.
“We’ve come a long way in policy tightening and we’re faced with uncertainty about the lagged effects of our tightening so far and the extent of the credit tightening from recent banking stresses. After getting this far, we’re ready to make careful considerations,” Powell said at a Fed conference on Friday. “We can afford to look at the data and the evolving outlook.”
Investors cut their forecasts for a rate hike next month to 13 percent, compared to 33 percent before Powell’s speech.
Powell’s remarks reinforce similar expectations from other members of the leadership team, including New York Fed President John Williams this week and Governor Philip Jefferson, who was recently nominated for vice president pending Senate confirmation.
“His comments suggest that his main view is to take a June break to evaluate incoming data,” said Kathy Bostjancic, chief economist at Nationwide Life Insurance Co. Although it beats expectations, the Fed chairman could still lead an increase as his “guidance is limited”.