WASHINGTON, March 20 - Federal Reserve Chair Jerome Powell said on Wednesday recent high inflation readings had not changed the underlying"story" of slowly easing price pressures in the U.S. as the central bank stayed on track for three interest rate cuts this year and affirmed that solid economic growth will continue.
Speaking after a policy meeting at which officials left the benchmark overnight interest rate in the 5.25%-5.50% range and held onto their outlook for three cuts in borrowing costs this year, Powell said the timing of those reductions still depends on officials becoming more secure that inflation will continue to decline towards the Fed's 2% target even as the economy continues to outperform expectations.
If they don't, Powell said the Fed would maintain high interest rates as long as needed. Asked explicitly about recent comments to Congress that the Fed was"not far" from gaining the confidence it needs to cut rates, he sidestepped repeating those words and instead said his"main message" was that the U.S. central bank still needed more data to change policy.
While officials affirmed their view for three rate cuts this year even as they upgraded the economic outlook, they trimmed the number of cuts expected next year from four to three for a slightly shallower pace of easing - a stance one analyst characterized as"bullish-dovish." U.S. stocks extended their gains following the release of the policy statement and updated projections and closed sharply higher. The U.S. dollar , opens new tab slipped against a basket of currencies, while yields on U.S. Treasuries fell. Investors strengthened bets of a first rate cut in June.
That represents a slightly hawkish change from the December projections, when 11 officials had seen three quarter-percentage-point cuts on tap for the year.
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