The U.S. central bank still needs more data before cutting interest rates to ensure that recent weaker inflation readings give a true picture of what is happening to underlying price pressures, Federal Reserve Chair Jerome Powell said on Tuesday.
“We just want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation,” Powell said at a monetary policy conference in Portugal sponsored by the European Central Bank. “We want to be more confident, and frankly because the U.S. economy is strong ... we have the ability to take our time.”
Inflation is still more than half a percentage point above that target, according to the Fed’s preferred personal consumption expenditures price index, and was described as “elevated” in the central bank’s June 12 policy statement. Whether the Fed ends up on that timetable or a more delayed one will hinge on coming employment and inflation reports, including the release on Friday of the monthly employment report for June and the July 11 release of the consumer price index for June.
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