U.S. Federal Reserve Chairman Jerome Powell has dampened expectations for an interest rate cut in March of this year.
Speaking to media, Powell said that it is unlikely the U.S. central bank will begin lowering interest rates in March as had been expected on Wall Street.
“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that. But that’s to be seen,” said Powell responding to a journalist’s question.
The Fed Chair’s comments came after the central bank decided to leave its benchmark interest rate unchanged at its current level of 5.25% to 5.50%.
However, despite throwing cold water on a March rate cut, Powell did reiterate that he does expect interest rates to be lowered at some point this year.
The Federal Reserve’s latest policy statement included several changes in language that suggested the central bank has taken further interest rate increases off the table but is not yet ready to cut rates.
Stocks had a negative reaction to the interest rate comments, with the blue-chip Dow Jones Industrial Average dropping more than 300 points at one point and the technology-heavy Nasdaq index declining more than 2%.
Futures traders now place the odds of an interest rate cut in March at 36%, down from 50% before the Fed’s latest interest rate decision and more than 80% in December.
The U.S. central bank’s next two interest rate decision dates are scheduled for March 20 and May 1 of this year.
