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Inflation Progress Cannot Be Guaranteed By The Fed, Powell Says
(CTN News) – There is “no assurance” that the US Federal Reserve will be able to bring down inflation in the near future, according to the chair of the nation’s central bank on Wednesday, ahead of two days of meetings in Washington.
A 23-year high in the key lending rate has been set by the Federal Reserve in order to deal with stubborn inflation, bringing the rate of price increases down from multi-decade highs to their long-run target of two percent, as a result.
Even so, inflation remains elevated, and recent data indicate that a bumpy path to two percent is likely to be a part of the journey.
“If the economy does evolve broadly as expected, it will likely be appropriate to begin easing policy restraints at some point this year,” Federal Reserve chairman Jerome Powell said in a statement on Thursday.
According to him, there is however uncertainty in the economic outlook and the continuation of progress toward our inflation target of two percent cannot be assured.
There will be two days of hearings on Capitol Hill this week devoted to Powell’s preparations for his speech to members of the House Financial Services Committee, during which he will likely be grilled about when he expects the Fed to begin reducing interest rates.
It seems that the Fed policymakers have penciled in three rate cuts for this year, but have not indicated when they will take place.
As a result, policymakers have made an effort to counter expectations of a rate cut in the months that have followed, warning against moving too quickly and re-igniting inflation.
Ahead of his prepared remarks to Congress, Powell indicated that the Fed’s rate-setting committee believes it will be inappropriate to reduce the target range until it has gained a greater degree of confidence in the steady movement of inflation towards two percent in the coming months.
In his words, “We remain committed to bringing inflation down once more.”.
The CME Group, in a survey of futures traders, has assigned a probability of just over 70 percent that the Federal Reserve will begin cutting interest rates by mid-June, which corresponds with what futures traders have been expecting for some time now.
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