Jerome Powell, the chair of the Federal Reserve, emphasized on Wednesday that before interest rates be lowered, authorities must first see more proof that inflation is declining.
The US Federal Reserve has maintained interest rates at a 23-year high of 5.25 to 5.50% in an effort to firmly bring inflation down to its two percent long-term target.
In spite of a recent spike in inflation that has hampered the fight against increasing prices, Federal Reserve officials last month decided to stick with their current plan of three rate decreases this year.
What Powell said on cutting interest rate?
Powell stated at a California conference that the dangers facing the US economy were “two-sided,” meaning that cutting interest rates too quickly or too slowly would have a detrimental impact on the economy.
“The risk, though, of moving too soon, really is.. that inflation does move up,” he stated, adding that it “would be quite disruptive if we were to have to then come back in.”
However, the majority of Fed participants still believe it will be “appropriate to begin lowering the policy rate at some point this year” if the US economy develops as anticipated, he said.
Federal Government on Interest Rate
However, Bostic has been the most explicit of all the Fed members in his public pronouncements regarding the forecast for interest rates.
For example, Fed Governor Adriana Kugler concurred with Bostic, Powell, and other officials’ judgment that the recent progress on inflation has been “bumpy.” Nevertheless, Kugler predicted that “I expect the disinflationary trend to continue” and help open the door for rate reductions throughout the year when speaking at Washington University in St. Louis.