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    Fed Chair Powell Still Expects to Cut Rates This Year, but Not Yet

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    Jerome H. Powell, chair of the Federal Reserve, said policymakers still expect to lower rates in 2024 — but the timing hinges on data.Jerome H. Powell, the chair of the Federal Reserve, said on Wednesday that he thinks the central bank will begin to lower borrowing costs in 2024 but that policymakers still needed to gain “greater confidence” that inflation was conquered before making a move.“We believe that our policy rate is likely at its peak for this tightening cycle,” Mr. Powell said in remarks prepared for testimony before the House Financial Services Committee. “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”The Fed next meets on March 19-20, but few investors expect officials to lower interest rates at that gathering. Markets see the Fed’s June meeting as a more likely candidate for the first rate cut, and are betting that central bankers could lower borrowing costs three or four times by the end of the year.The Fed chair warned against cutting rates too early — before inflation is sufficiently snuffed out — noting that “reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy.”He also acknowledged that there could be risks to waiting too long, adding that “reducing policy restraint too late or too little could unduly weaken economic activity and employment.”Mr. Powell and his colleagues are trying to strike a delicate balance as they figure out their next policy steps. Policymakers raised interest rates rapidly between March 2022 and July 2023, lifting them to a range of 5.25 to 5.5 percent, where they currently sit. That has made mortgages, business loans and other types of borrowing more expensive, helping to tap the brakes on an economy that otherwise retains substantial momentum.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Yellen Says Stable Financial System Is Key to U.S. Economic Strength

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      The Treasury secretary will offer an upbeat assessment of the economy on Tuesday, a year after the nation’s banking system faced turmoil.Treasury Secretary Janet L. Yellen will tell lawmakers on Tuesday that the United States has had a “historic” economic recovery from the pandemic but that regulators must vigilantly safeguard the financial system from an array of looming risks to preserve the gains of the last three years.Ms. Yellen will deliver the comments in testimony to the House Financial Services Committee nearly a year after the Biden administration and federal regulators took aggressive steps to stabilize the nation’s banking system following the abrupt failures of Silicon Valley Bank and Signature Bank.While turmoil in the banking system has largely subsided, the Financial Stability Oversight Council, which is headed by Ms. Yellen, has been reviewing how it tracks and responds to risks to financial stability. Like other government bodies, the council did not anticipate or warn regulators about the problems that felled several regional banks.“Our continued economic strength depends on a solid and resilient U.S. financial system,” Ms. Yellen said in her prepared remarks.Last year’s bank collapses stemmed from a confluence of events, including a failure by banks to properly prepare for the rapid rise in interest rates. As interest rates rose, Silicon Valley Bank and others absorbed huge losses, creating a panic among depositors who scrambled to pull out their money. To prevent a more widespread run on the banking system, regulators took control of Silicon Valley Bank and Signature Bank and invoked emergency measures to assure depositors that they would not lose their funds.The bank failures — and the government’s rescue — prompted debate over whether more needed to be done to ensure that customer deposits were protected and whether bank regulators were able to properly police risk.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Patrick McHenry, Former Interim Speaker, Will Leave Congress

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      The North Carolina congressman, who leads the House Financial Services Committee, said he would join the growing ranks of lawmakers exiting Congress amid intense dysfunction.Representative Patrick T. McHenry of North Carolina, who made history as the first interim speaker of the House after Republicans ousted their own speaker and struggled for weeks to agree on a successor, said on Tuesday that he would leave Congress at the end of his term.The announcement by Mr. McHenry, the chairman of the Financial Services Committee, added him to the growing ranks of lawmakers who have announced that they will depart the House and the Senate, many of them citing the historic dysfunction of Capitol Hill.“This is not a decision I come to lightly,” Mr. McHenry said in a statement. “But I believe there is a season for everything and — for me — this season has come to an end.”The bow-tied and bespectacled Mr. McHenry, 48, arrived in Congress as an unruly bomb thrower in 2005 and has matured into one of the more sober-minded leaders in a Republican conference whose actions are more often driven by the attention seekers. He was named speaker pro tempore after Republicans deposed Kevin McCarthy, the California Republican who is Mr. McHenry’s close ally.Mr. McCarthy is also expected to announce in the coming days that he will not seek re-election, and many of his colleagues do not expect him to finish out his term after he has discovered the life of a rank-and-file member to be a painful existence.Mr. McCarthy’s brutal ouster prompted the House’s first invocation of a post-9/11 crisis succession plan that requires the speaker to secretly designate an interim stand-in should the post become unexpectedly vacant. Those plans never envisioned that the crisis that would lead to a vacancy would be that members of the party controlling the House would choose to overthrow their own speaker.As Republicans struggled for three weeks to coalesce around any candidate to replace Mr. McCarthy and the House remained paralyzed, Mr. McHenry was under intense pressure to take on more power and interpret his role more broadly.But he steadfastly refused, even as members asked him to bring to the floor an uncontroversial resolution in support of Israel after the Oct. 7 Hamas terrorist attack in which about 1,200 people were killed and hundreds taken hostage. And when Republicans floated a plan to hold a formal vote to allow Mr. McHenry to preside over legislative business, he let it be known he was against it.Mr. McHenry argued that interpreting his role as anything more than simply convening the House to take a vote for a new speaker would only create more incentive for the Republican feuding to drag on and even grow worse. He made it clear that he harbored no ambition of becoming the speaker himself, and in fact was actively hostile to the idea.Mr. McHenry had chosen not to run for any leadership position during this Congress, in part because he believed that the most effective way to wield power in the House was to not allow anyone to have leverage over him. But Mr. McCarthy had a way of roping him back in.During Mr. McCarthy’s tenure as speaker, he cut out the official leadership structure, whose members he distrusted, and relied heavily on Mr. McHenry as his handpicked adviser to help handle debt ceiling negotiations with the White House and avert a government shutdown.Mr. McHenry’s departure from a seat in a solidly Republican district was not expected to have much impact on the race for control of the House, where his successor was all but certain to be another Republican.His decision not to seek re-election may have had as much to do with his own future prospects in the House as it did with overall dysfunction. Mr. McHenry will be term-limited out of his chairmanship at the end of next year.In announcing his decision not to seek another term, Mr. McHenry tried to play down any narrative that the spate of retirements and exits was due to the House becoming ungovernable.“There has been a great deal of hand-wringing and ink spilled about the future of this institution because some — like me — have decided to leave,” he said. “Those concerns are exaggerated. I’ve seen a lot of change over 20 years. I truly feel this institution is on the verge of the next great turn.”He added: “Evolutions are often lumpy and disjointed but at each stage, new leaders emerge. There are many smart and capable members who remain, and others are on their way. I’m confident the House is in good hands.” More