WASHINGTON (Reuters) – Federal Reserve Chairman Jerome Powell says Fed will cut inflation to 2% Efforts towards the target “still have a long way to go”. Wednesday, in prepared testimony to the House Financial Services Committee.
“Inflation has moderated since the middle of last year,” with the Fed’s preferred measure of inflation falling sharply from a peak of around 7% as of April, compared with 4.4% last year.
But recent progress has been slow.
“Inflationary pressures continue to rise, and the process of falling inflation” Powell said, “2% is still a long way to go. He noted that while the Fed held off on raising rates at last week’s FOMC meeting, “virtually all” participants expected further hikes to be appropriate by the end of the year.
Investors widely expect the Fed to resume rate hikes at its July meeting, although financial market indicators reflect skepticism that the Fed will raise rates further after that meeting.
“ My colleagues and I understand the difficulties that high inflation creates, and we remain firmly committed to our 2 percent goal,” Powell will tell a Republican-majority House committee.
As he told Part of the biannual reporting by federal lawmakers, the hearing, the first of two on Capitol Hill this week, is scheduled for 1400 AM (
Powell outlines the outlines of a debate that has policymakers weighing the The full impact of continued strength in the U.S. labor market and continued “moderate” economic growth combined with the fact that the Fed is rapidly raising interest rates may not yet be felt across the economy.
“We have seen the impact of our policy tightening on Implications for interest rate demand – “sensitive sectors of the economy such as housing,” Powell said.
“However, the full effects of monetary tightening will take time to materialize, particularly the impact on inflation,” Powell said. That has made it increasingly difficult for officials to judge whether they have raised interest rates enough to hit their inflation target or whether further reining in the economy is needed.
Powell said stress in the banking sector was also creating “headwinds” for households and businesses, the impact of which remained uncertain.
Given this situation, and the fact that the Federal Reserve has approved a decision not to raise rates last week by five percentage points since March 1400, it is seen as ” A “prudential” step that would “allow the committee to assess additional information and its implications for monetary policy,” Powell said.