Treasuries Move Lower As Powell Says Fed Not In A Hurry To Lower Rates

(RTTNews) - After ending the previous session roughly flat, treasuries moved to the downside during trading on Tuesday.

Bond prices came under pressure in early trading and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.4 basis points to 4.537 percent.

The lower close by treasuries came after Federal Reserve Chair Jerome Powell told the Senate Banking Committee the central bank does "not need to be in a hurry" to lower interest rates.

Powell noted interest rates have been lowered by a full percentage point since last September, describing the Fed's current policy stance as "significantly less restrictive than it had been."

"We know that reducing policy restraint too fast or too much could hinder progress on inflation," Powell said. "At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment."

Powell also suggested the Fed has options in determining the future path for rates depending on how the economy evolves.

"If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer," Powell said. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly."

He continued, "We are attentive to the risks to both sides of our dual mandate, and policy is well positioned to deal with the risks and uncertainties that we face."

Following its first monetary policy meeting of 2025 in late January, the Fed announced its widely expected decision to leave interest rates unchanged after cutting rates for three straight meetings.

The Fed's next monetary policy meeting is scheduled for March 18-19, with CME Group's FedWatch Tool currently indicating a 95.5 percent chance the central bank will once again maintain the target range for the federal funds rate at 4.25 to 4.50 percent.

Trading on Wednesday is likely to be driven by reaction to the Labor Department's report on consumer price inflation in January and its impact on the outlook for interest rates.