Fed Chairman Jerome Powell said the agency understands the difficulties that high inflation is causing and is strongly committed to returning inflation to its 2% target.
On June 21, in a prepared speech for a hearing before the US House Financial Services Committee, Federal Reserve ( Fed ) Chairman Jerome Powell said the country's fight against inflation "has a long way to go" to reach the 2% target.
“Inflation pressures continue to mount and there is a long way to go before inflation returns to 2%,” Mr. Powell said.
He noted that although the Fed postponed a rate hike at its recent meeting, most of its policymakers expect higher rates to be appropriate by the end of 2023.
The Fed chairman also said the agency understands the difficulties that high inflation is causing and is strongly committed to returning inflation to its 2% target.
The agency's policymakers are weighing factors such as the strength of the labor market as well as modest economic growth, a sign that the Fed's rate hikes have not yet had a full impact on the broader economy .
The Fed has seen the impact of tightening policy on demand in interest-rate sensitive sectors, such as housing, Mr. Powell said. However, it will take time to see the full impact of tightening monetary policy , especially on inflation.
The Fed chief also noted that stress in the banking sector is also having negative effects on households and businesses, and the impact of this problem is still unclear.
Given the above situation, Mr. Powell said that the decision not to raise interest rates last week was considered a cautious step, allowing the Fed to assess additional information and the impact of monetary policy./.
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