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How did the US Federal Reserve Chairman comment on the latest inflation data?
US Federal Reserve Chairman Jerome Powell said he still expects inflation to fall towards the US central bank's 2% target, as new data highlights the bumpy road that awaits officials as they discuss when to start cutting interest rates.
U.S. inflation was 2.5% in February, according to the key personal consumption expenditures measure the Fed uses to meet its target, meeting expectations but up slightly from 2.4% in the year through January.
Powell said the Bureau of Economic Analysis report released on Friday, March 29, as well as other recent data, showed that the path toward the 2% target was “bumpy at times.”
And on “Will progress in inflation slow for more than two months?” "Our position is we don't know," Powell said in San Francisco. "We'll tell you what we'll do if inflation falls. That's the base case, that's what we expect!"
The Fed's latest forecasts showed officials still expect to cut interest rates by 0.75 points this year, down from a 23-year high of 5.25-5.5%.
The latest inflation numbers come amid signs of continued strength in the US economy, despite the Federal Reserve's aggressive push to rein in inflation by raising interest rates by 525 basis points in 2022 and 2023.
Powell stressed that this American “exceptionalism” in the face of weaker global growth means that the central bank can take its time, adding: “We can be cautious about this decision [on when to cut interest rates], because we can be cautious.”
However, the pace of those cuts may be disrupted by a new wave of inflation. Gasoline costs have risen rapidly again in recent months, another reminder of price pressures that will also complicate the Biden administration's efforts to tout its economic record ahead of the November presidential election.
