Powell: More Good Data Would Strengthen Confidence Inflation Is Moving Toward 2%
July 09 2024 - 5:34AM
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Federal Reserve Chair Jerome Powell appeared before the Senate
Banking Committee on Tuesday and said more good data would
strengthen the central bank's confidence inflation is moving
sustainably toward its 2 percent target and lead to a potential
interest rate cut.
"The Committee has stated that we do not expect it will be
appropriate to reduce the target range for the federal funds rate
until we have gained greater confidence that inflation is moving
sustainably toward 2 percent," Powell said in prepared remarks.
"Incoming data for the first quarter of this year did not
support such greater confidence," he continued. "The most recent
inflation readings, however, have shown some modest further
progress, and more good data would strengthen our confidence that
inflation is moving sustainably toward 2 percent."
Powell's remarks come as a report released by the Commerce
Department late last month showed the annual rate of growth by core
consumer prices, which exclude food and energy prices, slowed to
2.6 percent in May from 2.8 percent in April.
On Thursday, the Labor Department is scheduled to release its
report on consumer price inflation in the month of June.
Economists expect the annual rate of consumer price growth to
slow to 3.1 percent in June from 3.3 percent in May, while the
annual rate of core consumer price growth is expected to hold at
3.4 percent.
The Fed Chair also warned of the risk that leaving interest
rates at an elevated level for too long could jeopardize economic
growth.
"In light of the progress made both in lowering inflation and in
cooling the labor market over the past two years, elevated
inflation is not the only risk we face," Powell said. "Reducing
policy restraint too late or too little could unduly weaken
economic activity and employment."
Addressing the current state of the U.S. economy, Powell noted
recent indicators suggest the economy continues to expand at a
solid pace.
"Gross domestic product growth appears to have moderated in the
first half of this year following impressive strength in the second
half of last year," he said. "Private domestic demand remains
robust, however, with slower but still-solid increases in consumer
spending."
He added, "In the labor market, a broad set of indicators
suggests that conditions have returned to about where they stood on
the eve of the pandemic: strong, but not overheated."
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