Powell says Fed won't wait for 2% inflation to cut rates

IconCryptoNewsTerminal Staff15 Jul, 2024

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Powell says Fed won't wait for 2% inflation to cut rates

Jerome Powell, Chairman of the Federal Reserve, said that the Fed will not wait to get to 2% inflation before it starts cutting rates. Powell had previously said that he was not comfortable cutting rates until inflation was headed down to 2%, but he has since said that it does not need to get to 2% before the Fed starts to cut rates. Powell made his comments in a speech to the Washington D.C. Economic Club. He said that the Fed has seen some progress on inflation in the first quarter of this year, and that the last three inflation reports have been quite a bit better. This has given the Fed more confidence that inflation is headed in the right direction. However, Powell also said that the Fed is not trying to be too risk-averse. He said that if the labor market were to weaken in a material way, the Fed would have to respond to that. The Fed makes decisions based on data, not politics. The economy has done remarkably well over the past two years, but growth is expected to slow somewhat this year, with inflation remaining somewhat elevated. Powell said that the Fed is not trying to be too risk-averse, and that it plans to act when it becomes confident about inflation.

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