Fed Chairman Powell wants to wait for "more good data"
The Federal Reserve of the United States refuses to be drawn out of its reserve, according to Fed Chairman Powell. Observers now expect the first interest rate cut in September.
Despite progress in the fight against inflation, the time for a monetary policy shift in the United States has not yet come for Federal Reserve Chairman Jerome Powell. We need more confidence that inflation will sustainably reach the Federal Reserve's target of two percent, he said in a hearing before the US Congress, according to the speech text. Recent data have shown further moderate progress. The economy has made "significant progress" towards lower inflation, and the labor market looks strong but not overheated. "Further good data" would strengthen the Central Bank's confidence. The Fed will decide on the further course "from meeting to meeting."
In adjusting monetary policy, the Fed will carefully consider incoming data, added the head of the US Federal Reserve before the Senate Banking Committee. With regard to achieving the goals of price stability and full employment, the risks are now more balanced. The Fed must weigh two risks against each other. The first risk is that it eases policy too slowly and the economy collapses under the weight of higher interest rates and unemployment rises strongly. The second risk is that lower interest rates stimulate economic activity and allow inflation to exceed its target.
The Federal Reserve is scheduled to hold its next monetary policy meeting at the end of the month. It is expected on the financial markets that it will remain unchanged and only lower the policy rate in September. The interest rate is currently in the range of 5.25 to 5.50 percent. Despite progress in the fight against inflation, the price pressures are still significantly stronger than the Fed's target of two percent inflation. However, for the consumer price data scheduled for Thursday in June, there is expected to be another decline in the rate to 3 %.
- Central banks around the world, including the Federal Reserve under Jerome Powell, are closely monitoring the economic situation in their respective countries.
- The ongoing debate within the Fed revolves around the appropriate use of interest rate policy to control inflation, with Jerome Powell acknowledging that further progress is needed to reach the target of 2%.
- Jerome Powell, the chairman of the Federal Reserve, has emphasized the importance of key interest rates in managing inflation and has indicated that a rate cut might be considered if the economic situation warrants it.
- Critics have argued that the current interest rate policy of the Federal Reserve is too restrictive and has contributed to higher unemployment and slower economic growth, contrasting with the Fed's dual mandate of fostering full employment and price stability.
