Federal Reserve Chair Jerome Powell said on Tuesday that he didn’t anticipate inflation returning to its 2% target before the end of next year at the earliest — and would not commit to cutting interest rates this year.
“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 the conference sponsored by the European Central Bank.Fed Chair Jerome Powell said that the central bank needed to see more evidence of cooling inflation before slashing interest rates.Data for May showed the Fed’s preferred measure of inflation did not increase at all that month, while the 12-month rate of price increases has ebbed to 2.
“We’ve made quite a bit of progress and in bringing inflation back down to our target,” the Fed chair said.The Fed has kept its benchmark policy interest rate steady in the 5.25%-5.5% range since last July. Investors on Wall Street had originally anticipated as much as three interest rate cuts beginning this summer, but stubbornly high inflation forced the Fed to shelve those plans.Now the most optimistic forecasts call for one interest rate cut sometime this fall.“We’re well aware that if we go too soon, that we can undo the good work we’ve done,” Powell said.Powell said he saw “disinflationary” data indicating that the rate of price increases were inching closer to the Fed’s 2% target.
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