The Federal Reserve is committed to bringing inflation down to its 2% goal, which means interest rates will continue to rise, Federal Reserve Chairman Jerome Powell said in a speech at a conference on Friday. But by how much more will depend on incoming data, he said.
Since the Fed’s policy-making arm last met in July, the Fed has seen some encouraging signs inflation is easing. July’s consumer price index rose an annual 8.5%, off the blistering pace of 9.1% in June. And this morning, the Fed’s preferred inflation gauge – the personal consumption expenditures price index – showed a year-over-year rise of 6.3% in July, down from 6.8% in June.
But Powell emphasized that one month isn’t a trend and that the labor market continues to be very strong. Higher interest rates, slower growth, and softer labor market conditions would bring down inflation.
“While the lower inflation readings for July are welcome, a single month’s improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down,” he said.
Before its September meeting, the Fed will get another month’s worth of data. August’s consumer price index is due on Sept. 13 and the monthly jobs report on Sept. 2.
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