Mr. Jerome Powell said that US inflation is not cooling down fast enough, forcing them to keep interest rates at current levels.
"Recent data show that growth and the labor market remain strong. Progress toward the 2% inflation target is slow," Federal Reserve Chairman Jerome Powell said at a forum on April 16 in Washington (USA).
Echoing recent statements by Fed officials, Powell indicated that current policy would remain in place until inflation returns to its 2% target. The agency has kept its benchmark interest rate at 5.25-5.5% since July 2023, a 23-year high. Previously, the Fed had raised interest rates 11 times in a row.
"Recent data clearly do not give us more confidence. Current policy is appropriate to deal with the upcoming risks," he said.
Federal Reserve Chairman Jerome Powell at a press conference in December 2023. Photo: Reuters
The comments came after US officials reported higher-than-expected inflation in the first quarter of the year. The country’s consumer price index (CPI) rose 3.5% in March compared to last year, down sharply from a peak of 9% in mid-2022 but has been on the rise since late 2023.
Still, the Fed's preferred inflation gauge, the personal consumption expenditures (PCE) index, has shown prices have not changed much in recent months. "We said at the last policy meeting that we would only ease policy when we were more confident about inflation moving toward 2%," Powell reiterated.
Recent U.S. economic data has prompted markets to revise their forecasts. Earlier this year, investors were betting on the Fed cutting rates five or six times this year, starting in March. But now they think the rate cut will have to wait until September and the adjustment will only happen once or twice.
In its March report, the Fed hinted at three cuts this year. However, in recent days, it has repeatedly said that policy will be adjusted based on the data and has not committed to any cuts. The Fed's next meeting is April 30-May 1.
Ha Thu (according to Reuters, CNN)
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