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Powell: it takes more time to achieve inflation of 2%


April, 17 2024
watermark Economic news

At a meeting of the Federal Reserve System on Tuesday, Jerome Powell noted that, given the strong labor market in the United States and progress in combating inflation, it is reasonable to postpone a decision on monetary policy. And more attention should be paid to economic data and changing prospects. 


This was the first recognition that despite the disappointing inflation data for the first quarter of this year, the Fed is not going to cut interest rates soon, which remain at a 23-year high.


Powell's new statement differs from his comments made just two weeks ago, when he assured that the inflation forecast remains unchanged despite unexpectedly high figures at the beginning of the year. 


Yesterday, he did not give guarantees or forecasts about a rate cut this year at all, noting that the Fed prefers to focus on the personal consumer spending Price index (PCE), which excludes volatile food and gasoline prices. According to him, in March, this index remained virtually unchanged compared to February, remaining at 2.8%, which exceeds the Fed's target of 2%.


Powell stressed that before making a decision to lower rates, it is necessary to be sure that inflation is steadily approaching the level of 2%. At the same time, data on the consumer price index (CPI) for March continued to remain high for the third month in a row, showing an increase of 3.5% compared to the previous year, exceeding economists' expectations.


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