Jerome Powell Discusses Fed’s Approach to Interest Rates

In a recent interview, Federal Reserve Chair Jerome Powell emphasized the importance of basing interest rate decisions on solid data, particularly given the weak Q1 reports. Powell refrained from hinting at potential rate cuts or hikes, stressing the need for caution. He noted that the low-interest-rate environment from the global financial crisis through the COVID pandemic was historically unusual and driven by factors like demographics, globalization, and technological evolution. Powell indicated that current rates around 5.3% are restrictive but not severely so, and that the neutral rate might be higher than it was historically. He contrasted the U.S. economic growth with the eurozone’s, which has experienced prolonged low growth. Powell underscored that the Fed aims to avoid erratic rate changes and prefers a measured approach based on robust data.