Fed can be 'prudent' in weighing rate cuts, Powell tells '60 Minutes'

By Howard Schneider

WASHINGTON (Reuters) - The U.S. Federal Reserve can be "prudent" in deciding when to cut its benchmark interest rate, with a strong economy allowing central bankers time to build confidence inflation will continue falling, Fed chair Jerome Powell told the CBS news show "60 Minutes" in an interview that aired Sunday night.

"The prudent thing to do is...to just give it some time and see that the data confirm that inflation is moving down to 2% in a sustainable way," Powell said. "We want to approach that question carefully."

Powell reiterated many of the comments made at his press conference last week after the Fed held its benchmark interest rate steady in the current range of between 5.25% and 5.5%.

In particular he said that evidence of a weakening job market might make the Fed move faster, while data showing that inflation had stopped declining might cause the Fed to delay rate cuts longer than expected.

But, as he said last week, Powell told the nationally broadcast news show that he and his colleagues were confident that inflation is likely going to continue falling in coming months, with officials seeking a bit of additional certainty in where things stand before they start to cut rates.

Absent an outside shock, Powell said he expected the economy to continue growing.

"We have to balance the risk of moving too soon...or too late," Powell said "We think the economy's in a good place. We think inflation is coming down. We just want to gain a little more confidence that it's coming down in a sustainable way toward our 2% goal."

The Fed's preferred measure of inflation, the personal consumption expenditures price index, was running at a 2.6% annual rate as of December, though over shorter three- and six-month horizons it has been below the Fed's target.

Powell was interviewed on Feb. 1, and so was not asked about and did not speak directly to a jobs report released Feb. 2 that showed stronger than expected job and wage growth in January -- the type of data that might lean against a later rather than earlier start to rate cuts.

The ultimate start of rate cuts "is really going to depend on the data," Powell said. Asked about Fed policymaker projections in December that anticipate three quarter point rate cuts this year, the Fed chair said that "nothing has happened in the meantime that would lead me to think that people would dramatically change their forecasts."

(Reporting by Howard Schneider; Editing by Chizu Nomiyama)