Despite a recent slowdown, U.S. Federal Reserve Chairman Jerome Powell highlighted that inflation in the United States remains “persistently high.” This statement keeps the possibility of a new rate hike on the table.
Read more: The Fed holds interest rates, Powell thwarts investors’ hopes for a cut soon
During a conference in New York, he further stated that if there is additional evidence of long-term higher growth, be it from mainstream sources or indications of labor market tensions, it might necessitate further tightening of monetary policy.
In an effort to combat inflation without risking a recession, the Fed has recently eased the pace of tightening its monetary policy. Despite this, the benchmark lending rate has reached its highest level in 22 years.
Since reaching its peak in June of last year, the primary inflation rate has dropped by over 50 percent. However, it still exceeds the long-term target of 2 percent.
“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said, citing the progress made since inflation peaked last year but also noting that one of the Fed’s main measures of inflation remained at 3.7 percent through September, nearly twice the central bank’s target.
Bumpy path
“We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters,” Powell said. “The path is likely to be bumpy and take some time…My colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent.”
Powell stressed that the deliberate pace of actions this year is intended to provide ample time for the effects of monetary policy to unfold. He emphasized the significance of exercising caution, implementing risk management strategies, and practicing patience to prudently manage the speed of actions taken. This approach ensures a thorough evaluation of their complete impact.
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