Fed's Powell: High inflation to delay this year's rate cuts
Federal Reserve Chair Jerome Powell stated that a "lack of further progress" in controlling inflation means the central bank will likely refrain from reducing interest rates at its upcoming policy meeting just two weeks away, instead maintaining elevated interest rates for a prolonged period.
Since the beginning of the year, Federal Reserve decision-makers have stated that any reductions in interest rates would depend on them gaining "greater confidence" that inflation is progressing towards the central bank's 2% target. However, data from the past few months indicates that price pressures may be moving in the opposite direction.
"If elevated inflation continues, we can keep the current level of policy constraint in place for as long as necessary," Powell remarked. "Simultaneously, we have ample room to loosen policy should the labor market unexpectedly deteriorate."
The remarks from the Federal Reserve chairperson suggested that without additional data demonstrating a decline in inflation, the central bank may implement fewer than the three 0.25% interest rate cuts that its policymakers had projected during their prior meeting in March.
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