Federal Reserve Chairman Jerome H. Powell began his press conference by stating that the Committee would not begin cutting rates until it was “confident” that the economy was on a path towards 2% inflation and full employment. A great deal of the subsequent Q&A focused on what kinds of evidence over what period of time would be required to ensure “greater confidence” that policy was on the desired path. In response, Powell declined to give specific numbers or time periods to obtain that confidence but instead pointed to evidence from incoming data, though the exact timing was considerably uncertain. For example, if incoming inflation data declined significantly, then cuts might come sooner. Conversely, if inflation plateaued or increased, then cuts might be delayed. Similarly, if there was significant evidence that unemployment suddenly increased or there was evidence of significant weakness in labor markets, then cuts might come sooner. Powell did, however, suggest that March would be too soon. Additionally, when it came to the three cuts that were penciled in for 2024, Powell did state that those were in the December SEPs, which were prepared when participants expected growth in Q4 2023 to be slower than it subsequently turned out to be. The March 2024 SEPs might reflect a different view on timing if growth continues to be strong.

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