Fed Chief Sounds Unready to Start Cutting Interest Rates

A former Federal Reserve chief was once credited with referring to low rates as like a punch bowl at a party. Current Chair Jerome Powell on Wednesday signaled he’s not even ready to send out the invites.

Countering traders’ bets that the Fed will start lowering rates next month, Powell in his press briefing said “I don’t think it is likely that the committee will reach a level of confidence by the time of the March meeting.”

The Fed did make clear, though, that it’s now in a different place than it had been. In its policy statement, the rate-setting panel removed an explicit reference to potential rate hikes. And policymakers indicated that “greater confidence that inflation is moving sustainably toward 2%” would be required to lower rates.

The result on Wall Street: the worst selloff in equities on a Fed day since March last year, when the

regional banking crisis was in full swing. (Perhaps not coincidentally, Wednesday also saw troubling news about a regional lender.)

As for how long it will take before the Fed gets comfortable inflation is whipped, Powell said, “I will not put a number on it.” He also alluded to disagreement in the committee: “There is a wide disparity, a healthy disparity of views” on the path for rates.

Economists at Goldman Sachs, who pushed back their forecast for the first cut to May from March, also referenced that range of opinions.

“We think that the best explanation for today’s meeting is that FOMC participants with a range of different views have compromised on likely starting a bit later,” economist David Mericle wrote in a note.

Read More: World Economy Latest: Fed View on Interest Rates - Bloomberg