Powell: Progress on Inflation, But Not Cutting Rates Yet
Submitted by MAGA Student
Posted 2 days ago
Federal Reserve Chair Jerome Powell expressed satisfaction Tuesday with the progress on inflation over the past year but said he wants to see more before being confident enough to start cutting interest rates.
Speaking at a central banking forum in Sintra, Portugal, Powell said, "We've made quite a bit of progress and in bringing inflation back down to our target."
However, he added that the Fed wants to be more confident that inflation is moving sustainably down toward 2% before it starts the process of reducing or loosening policy.
Powell's comments come as markets closely watch moves from the Fed and its global counterparts as inflation shows signs of easing and some central banks, including the European Central Bank, have slowly started rolling back interest rates.
The Commerce Department's personal consumption expenditures price index, which the Fed focuses on as its main inflation gauge, rose at a 2.6% 12-month pace in May. That level has come down steadily after being around 4% a year ago, though policymakers do not expect it to reach the Fed's 2% goal until 2026.
While Powell said he sees progress on inflation, he's wary of moving too soon and threatening the downward path of price increases, which hit their highest pace since the early 1980s two years ago.
"We're well aware that if we go too soon, that we can undo the good work we've done," he said. "If we do it too late, we could unnecessarily undermine the recovery and the expansion."
Powell was also asked about whether he was concerned about the political climate and specifically should Donald Trump, a fierce Powell critic, win the November presidential election.
"I am not focused on that at all, and that's not just a talking point," Powell said. "I really think that we just keep doing our jobs."
The Fed has been under pressure from both sides of the political aisle to address inflation, with Republicans and Democrats alike calling for action. However, Powell has remained steadfast in his commitment to keeping the Fed independent from political influence.
"We're going to continue to do our job, which is to use our tools to achieve our dual mandate of maximum employment and price stability," he said.
Powell's comments come as the U.S. economy continues to recover from the COVID-19 pandemic, with unemployment falling and economic growth picking up. However, inflation remains a concern, with prices for goods and services rising at a faster pace than wages.
The Fed has been using a variety of tools to address inflation, including raising interest rates and reducing its bond-buying program. However, some economists have called for more aggressive action, such as raising rates more quickly or implementing yield curve control.
Powell has said that the Fed will continue to monitor the situation closely and adjust its policies as needed. However, he has also cautioned against moving too quickly, saying that the Fed wants to avoid creating unnecessary volatility in the markets.
"We're going to be patient, we're going to be careful, and we're going to make sure that we're doing the right thing for the economy," he said.
Sources:
cnbc.com
townhall.com
zerohedge.com
Speaking at a central banking forum in Sintra, Portugal, Powell said, "We've made quite a bit of progress and in bringing inflation back down to our target."
However, he added that the Fed wants to be more confident that inflation is moving sustainably down toward 2% before it starts the process of reducing or loosening policy.
Powell's comments come as markets closely watch moves from the Fed and its global counterparts as inflation shows signs of easing and some central banks, including the European Central Bank, have slowly started rolling back interest rates.
The Commerce Department's personal consumption expenditures price index, which the Fed focuses on as its main inflation gauge, rose at a 2.6% 12-month pace in May. That level has come down steadily after being around 4% a year ago, though policymakers do not expect it to reach the Fed's 2% goal until 2026.
While Powell said he sees progress on inflation, he's wary of moving too soon and threatening the downward path of price increases, which hit their highest pace since the early 1980s two years ago.
"We're well aware that if we go too soon, that we can undo the good work we've done," he said. "If we do it too late, we could unnecessarily undermine the recovery and the expansion."
Powell was also asked about whether he was concerned about the political climate and specifically should Donald Trump, a fierce Powell critic, win the November presidential election.
"I am not focused on that at all, and that's not just a talking point," Powell said. "I really think that we just keep doing our jobs."
The Fed has been under pressure from both sides of the political aisle to address inflation, with Republicans and Democrats alike calling for action. However, Powell has remained steadfast in his commitment to keeping the Fed independent from political influence.
"We're going to continue to do our job, which is to use our tools to achieve our dual mandate of maximum employment and price stability," he said.
Powell's comments come as the U.S. economy continues to recover from the COVID-19 pandemic, with unemployment falling and economic growth picking up. However, inflation remains a concern, with prices for goods and services rising at a faster pace than wages.
The Fed has been using a variety of tools to address inflation, including raising interest rates and reducing its bond-buying program. However, some economists have called for more aggressive action, such as raising rates more quickly or implementing yield curve control.
Powell has said that the Fed will continue to monitor the situation closely and adjust its policies as needed. However, he has also cautioned against moving too quickly, saying that the Fed wants to avoid creating unnecessary volatility in the markets.
"We're going to be patient, we're going to be careful, and we're going to make sure that we're doing the right thing for the economy," he said.
Sources:
cnbc.com
townhall.com
zerohedge.com
