Fed’s Powell expresses caution regarding declaring victory over inflation


(MENAFN) Federal Reserve Chair Jerome Powell, speaking after his testimony to the US House of Representatives Committee on Financial Services on Wednesday, expressed caution regarding declaring victory over inflation despite notable improvements over the past two years.

"I am not ready to say that yet," Powell remarked in response to questions about whether he believed inflation had been sufficiently managed. He emphasized that while inflation has decreased significantly from its peak of 9.1 percent in the summer of 2022, with consumer inflation annually rising 3.3 percent in May, the Federal Reserve remains vigilant.

Powell reiterated his belief that the US economy is moving towards a "soft landing," a scenario where the central bank raises interest rates sufficiently to curb inflation without triggering a recession. He stressed the Fed's commitment to achieving full price stability while keeping unemployment low, describing it as a focused and deliberate path.

The Fed had aggressively raised interest rates by a total of 525 basis points across 11 meetings from March 2022 to July 2023 to combat the highest inflation levels in nearly four decades. Powell acknowledged that the upcoming consumer inflation figures for June, to be released Thursday at 8:30 AM EDT, could influence future monetary policy decisions.

"Our approach is to make decisions based on incoming macroeconomic data as they need to be made," Powell stated. He reassured that any actions taken by the Fed would be grounded in thorough analysis and historical precedent, aiming to maintain economic stability and manage inflation effectively moving forward.

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