Federal Reserve Chair Jerome Powell said Wednesday the central bank won’t begin cutting its key interest rate “until it has gained greater confidence that inflation is moving sustainably toward” its 2% goal, noting the move will likely occur “at some point this year.”
His comments, in prepared remarks he delivered before the House Financial Services Committee at 10 a.m., echo those he made at the Fed’s last meeting in late January.
In the text, Powell said inflation “has eased substantially” and he did not mention a recent rebound in monthly price increases that led some economists to push back their forecast for the first rate decrease to later in the year. That could be a positive signal that Fed officials are not overly concerned by the price spike.
Responding to questions from committee members, Powell added, “because the economy has been so strong we think we can and should be careful” about slicing rates. He added the Fed wants “to see more good inflation readings” to feel confident that the recent pullback in price gains won’t stall or reverse.
What is the inflation rate in 2024?
In January, inflation overall rose 0.3% while a core measure that excludes volatile food and energy items increased 0.4%, both substantially higher than the recent trend, according to the personal consumption expenditures index, the Fed’s preferred gauge.
But those readings still pushed down annual inflation to 2.4% and the core yearly measure to 2.8%. Personal consumption…
