03:15 PM EST, 03/07/2024 (MT Newswires) -- Fed Chairman Jerome Powell (voter) repeated to the Senate Banking Committee that the FOMC is expected to lower interest rates this year assuming the economy evolves as expected, again saying that the process would be done "carefully."

Powell said that the housing sector, which has been severely impacted by the high level of interest rate, is not likely to be immediately mended by lower rates due to a low inventory of homes for sale and elevated prices.

Also, Powell repeated that there would be material changes to the Basel III regulations before they are voted on and that the Fed is "nowhere near" establishing a central bank digital currency.

Fed Governor Michelle Bowman (voter) repeated that it is not the time yet to cut rates and suggested that further policy tightening, while not expected, cannot be completely ruled out given uncertainties in the outlook.

Cleveland Fed President Loretta Mester (voter) said that she sees the FOMC lowering rates later this year but said that she sees no rush to begin the process until it is certain that inflation is slowing toward the 2% goal in a sustainable way.

Recent comments of note:

(March 6) Fed Chairman Jerome Powell (voter) said in his prepared testimony that it would "likely" be appropriate to cut interest rates this year if the economy evolves as expected but cautioned that risks remain and that the FOMC does not expect it would be time to lower rates until there is greater confidence that the inflation is slowing "sustainably" toward the 2% goal. In the question-and-answer session, Powell went on to say that the Fed will act "carefully and thoughtfully" when considering interest rates, a luxury that the FOMC has due to the strength of the economy and the labor market, adding that a soft landing is attainable. Powell indicated that no final decisions have been made regarding the controversial Basel III endgame bank capitalization proposals but conceded that large changes are likely from the preliminary proposals.

(March 6) San Francisco Fed President Mary Daly (voter) said that the FOMC is prepared to do its job to bring down inflation, Reuter reported. Daly said that the FOMC has limited tools to impact housing affordability, a source of inflation that Powell was questioned on frequently in this testimony.

(March 6) The Fed's Beige Book showed slight growth in the US economy since early January, with hiring up slightly to modestly, but with some easing in labor market tightness. Likewise, price pressures remain, pushing consumers to focus on necessities rather than discretionary purchases.

(March 4) Atlanta Fed President Raphael Bostic (voter) said that the unusual combination of inflation and solid economic growth gives the FOMC time to consider its policy moves, noting the risks of acting too quickly vs not quickly enough to loosen policy, but emphasizing that he would not be comfortable with lowering rates until he is certain that inflation is consistently slowing.