Federal Reserve Chair Powell: US Economy Strong, but Inflation Still Below Target

Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon. Speaking to a policy forum focused on U.S.-Canada economic relations, Powell said that while inflation continues to make its way lower, it hasn’t moved quickly enough, and the current state of policy should remain intact.

A consumer price index reading for March, released last week, showed inflation running at a 3.5% annual rate — well off the peak around 9% in mid-2022 but drifting higher since October 2023. Treasury yields rose as Powell spoke. The benchmark 2-year note, which is especially sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose 3 basis points. The S&P 500 wavered after Powell’s remarks, briefly turning negative on the day before recovering.

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