A rate cut should wait until the Fed is “more confident” that inflation will return to its 2% target, Fed Chairman Jerome Powell said, stressing that the US central bank needs to see “better data”.
In particular, Fed Chairman Jerome Powell opened the press conference after the Fed’s announcements by noting that the US economy has made progress toward the central bank’s two goals of reducing inflation to 2% and maximizing employment.
“Our economy has made significant progress toward both goals in recent years,” Powell said. “The labor market has achieved better balance with continued strong job growth and low unemployment. Inflation has decreased significantly, from (around) 7% to 2.7%. But it is still very high,” he said.
Powell noted that the “tough stance” of monetary policy will be maintained to reduce inflationary pressures. “Consumer spending remains stable despite the strong slowdown of last year,” he noted.
Demand and supply are better balanced in the labor market. The participants of the meeting believe that the strengthening of the labor market will continue, Powell said. “Labor market conditions are broadly back to where they were before the Covid pandemic,” he said.
In Powell’s view, the post-pandemic normalization of the labor market has now come full circle. Recent inflation figures “have softened a bit,” Powell said.
