403
Sorry!!
Error! We're sorry, but the page you were
looking for doesn't exist.
Fed chair urges caution on rate adjustments despite inflation target
(MENAFN) Federal Reserve Chair Jerome Powell emphasized to lawmakers on Wednesday that the central bank is cautious about waiting for inflation to reach its target of two percent before considering rate adjustments. Powell stated during his testimony to the US House Financial Services Committee that the Fed recognizes the momentum of inflation and the risks of waiting too long for it to subside completely.
"We've said that you don't want to wait until inflation gets all the way down to two percent, because inflation has a certain momentum," Powell explained. "If you waited that long, you've probably waited too long," he added, underscoring that allowing inflation to drop significantly below the target would also be undesirable.
Powell's remarks came in response to questions about whether the Fed's preferred inflation metric, the Personal Consumption Expenditures price index, would need to dip below two percent temporarily for policymakers to consider rate cuts in the near future.
The Fed chair's comments followed his recent observation that recent inflation data has shown modest improvements, with the caveat that sustained progress and additional positive economic data are needed to confirm a sustainable slowdown in price increases.
Over the past several years, the Fed had raised its benchmark lending rate to historically high levels in efforts to mitigate rising demand and inflation pressures. However, in recent months, the Fed has maintained this rate at levels seen over the past two decades, indicating a cautious approach as inflation, while peaking, has not shown significant declines.
Powell also emphasized the importance of the Fed's political independence in his testimony, highlighting that it is crucial for the central bank to fulfill its mandate effectively and maintain trust across the political spectrum.
"We've said that you don't want to wait until inflation gets all the way down to two percent, because inflation has a certain momentum," Powell explained. "If you waited that long, you've probably waited too long," he added, underscoring that allowing inflation to drop significantly below the target would also be undesirable.
Powell's remarks came in response to questions about whether the Fed's preferred inflation metric, the Personal Consumption Expenditures price index, would need to dip below two percent temporarily for policymakers to consider rate cuts in the near future.
The Fed chair's comments followed his recent observation that recent inflation data has shown modest improvements, with the caveat that sustained progress and additional positive economic data are needed to confirm a sustainable slowdown in price increases.
Over the past several years, the Fed had raised its benchmark lending rate to historically high levels in efforts to mitigate rising demand and inflation pressures. However, in recent months, the Fed has maintained this rate at levels seen over the past two decades, indicating a cautious approach as inflation, while peaking, has not shown significant declines.
Powell also emphasized the importance of the Fed's political independence in his testimony, highlighting that it is crucial for the central bank to fulfill its mandate effectively and maintain trust across the political spectrum.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.
Most popular stories
More Story
Comments
No comment