Powell ruled out a rate cut without progress on inflation. Stocks accelerated their decline

The US Federal Reserve will not cut interest rates unless it sees progress on inflation this year, Fed Chairman Jerome Powell said. However, he himself expects a slowdown in inflation to become noticeable by the middle of the year as the effect of duties diminishes. U.S. stocks accelerated their decline on the back of Powell's press conference - after an unexpectedly high rise in wholesale prices and the Fed's decision to leave the rate unchanged.

"The forecast assumes we will make progress on inflation. It has to come. As we are starting to see, [it will happen] by the middle of the year, [when] progress on duties shows up, duty-related inflation will come down. The rate outlook depends on the performance of the economy. So if we don't see that forecast, then you won't see a rate cut," Jerome Powell said during a press conference after the Fed meeting(quoted by Bloomberg).

The broad market index S&P 500 at the time of publication of this material declined by 1.1%, the index of "blue chips" Dow Jones Industrial Average - by 1.4%, "technological" index Nasdaq Composite - by 1.1%. The yield on bonds of the U.S. Treasury Department increased after Powell's words about inflation: two-year trijeris grew by 6 basis points - up to 3.735%, writes Bloomberg.

The personal consumption expenditure (PCE) index for February probably rose 2.8% in February (or 3% on an underlying basis - excluding volatile food and energy prices), Powell said. The figures, which were not previously released, suggest a slowdown in core PCE, which was 3.1% in January, Bloomberg noted.

In the near term, rising energy costs due to the U.S. war with Iran will lead to higher overall inflation, but it is "too early" to assess the scale and duration of potential effects on the economy, the Fed chief said. But the jump in energy prices does not happen in isolation and cannot be ignored, he added.

In addition, Powell said that he will serve as Fed chairman until a successor is officially appointed, and that he will not leave the Fed until the end of the U.S. Justice Department's criminal investigation against him. Powell's term as Fed chairman ends in May, but he has the right to remain on the board of governors until January 2028. Whether he will exercise that right even after the investigation is over, Powell has not yet decided, he said. President Donald Trump has nominated economist Kevin Warsh as the next Fed chairman, but the Senate has yet to confirm his nomination.

Following the results of the meeting on March 17-18, the U.S. Federal Reserve kept interest rates unchanged - at the level of 3.5-3.75%. The regulator noted that "the consequences of events in the Middle East for the U.S. economy are unclear", and uncertainty "remains elevated". The Fed's decision was expected, but the market is trying to guess whether the regulator will basically cut rates this year.

Trump announced the duties on imports from most countries in April 2025, but in February 2026 the Supreme Court ruled that they were illegal, ruling that the president had exceeded his authority in imposing them. Trump responded to the court's position by deciding to impose 15% duties on other grounds.

In January, the US Justice Department launched an investigation into Powell over the $2.5 billion renovation of the Federal Reserve building in Washington, D.C. The investigation "should be viewed in the broader context of threats from the administration of US President Donald Trump and continued pressure" to demonstrate influence over the regulator, the Fed chief said.

This article was AI-translated and verified by a human editor