15/05/2024
Federal Reserve Chair Jerome Powell said the US central bank must be patient and wait for evidence that inflation continues to cool, doubling down on the need to keep borrowing costs elevated for longer.
The Fed chief said recent inflation figures indicate it will likely take more time than previously thought to attain the confidence needed to lower interest rates, echoing comments he made earlier this month.
“We did not expect this to be a smooth road, but these were higher than I think anybody expected,” Powell said Tuesday, referring to the lack of inflation progress in the first quarter. “What that has told us is that we’ll need to be patient and let restrictive policy do its work.”
“It looks like it will take longer for us to become confident that inflation is coming down to 2% over time,” he added.
During the event hosted by the Foreign Bankers’ Association in Amsterdam, Powell described current policy as restrictive by “many, many measures” but noted time will tell whether rates are sufficiently high to bring inflation back to the central bank’s 2% goal. The Fed chief reiterated it wasn’t likely that the central bank’s next move will be a hike.
“We think that it’s probably a matter of just staying at that stance for longer,” Powell said.
US central bankers, including Powell, have expressed disappointment at the lack of inflation progress in the first quarter. Earlier this month, policymakers kept their benchmark policy rate unchanged at a 23-year high, a level Powell said he was prepared to maintain “for as long as appropriate.”
During the moderated discussion between Powell and European Central Bank Governing Council member Klaas Knot, Powell said that he expects inflation will move lower on a monthly basis. However, price figures in the first quarter have tempered his confidence.
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