February 24, 2024
Fed's Powell says inflation is slowing but says more progress is needed

WASHINGTON (AP) — Inflation continues to slow, but it is too early to declare victory or discuss when the Federal Reserve might cut interest rates, Chairman Jerome Powell said in prepared remarks Friday.

Speaking at Spelman College in Atlanta, Powell said that excluding volatile food and energy costs, consumer prices had risen at only a 2.5% annual rate over the past six months. That’s not much above the Fed’s 2% inflation target.

Still, more progress is needed, Powell said. He added, “It is too early to conclude with confidence” that the Fed has raised its benchmark interest rate high enough to completely stave off high inflation.

“Nor is it the time to speculate on when policy may ease,” Powell said, referring to the possibility of a cut in the Fed’s benchmark interest rate, which affects many consumer and business loans.

Instead, he said, the Fed’s interest-rate-setting committee is “proceeding cautiously” — adding that analysts take this to be a sign that the central bank plans to make no changes to interest rates any time soon.

Fed policymakers are expected to leave interest rates alone at their next meeting on Dec. 12-13. This will be the third consecutive meeting in which he has kept the rates at the current level. In early March 2022, the Fed raised its key rate 11 times from near zero to about 5.4%, the highest level in 22 years.

Those rate increases have made loans significantly more expensive throughout the economy, especially for mortgages, auto loans, credit cards and business lending. This has resulted in fewer purchases of homes, cars, furniture, and appliances, a trend that has slowed the economy and modestly depressed prices in those categories.

Powell’s comments on Friday follow comments from Fed officials this week, most of whom indicated that the Fed could afford to keep its key rate steady in the coming months. But like Powell, he has been reluctant to signal an end to rate hikes.

Source: apnews.com

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