Investors See 4 Rate Cuts From Fed After Powell Speech

Investors solidified bets on how deeply the Federal Reserve will cut interest rates this year after Fed Chairman Jerome Powell said that the "time has come for policy to adjust," Josh Schafer reported for Yahoo Finance.

The Fed chair stated that the central bank has "ample room" to maneuver as policy enters its next phase. I Photo: U.S. Federal Reserve

Powell noted that the timing and pace of cuts will "depend on incoming data," but markets quickly moved to fully price in four rate cuts of 0.25% by the end of 2024 after the Fed chair stated that the central bank has "ample room" to maneuver as policy enters its next phase.

"The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions,"

Powell said. Renaissance Macro head of Economics Neil Dutta highlighted in a note to clients that Powell didn't use the word "gradual" when referring to rate cuts, unlike some other Fed officials in recent days.

This, Dutta argued, suggests "Powell is not removing the optionality of making large moves as policy adjusts."