Current:Home > ScamsPowell says Federal Reserve is more confident inflation is slowing to its target-DB Wealth Institute B2 Expert Reviews
Powell says Federal Reserve is more confident inflation is slowing to its target
View Date:2024-12-23 18:44:56
WASHINGTON (AP) — Chair Jerome Powell said Monday that the Federal Reserve is becoming more convinced that inflation is headed back to its 2% target and said the Fed would cut rates before the pace of price increases actually reached that point.
“We’ve had three better readings, and if you average them, that’s a pretty good pace,” Powell said of inflation in a question-and-answer question at the Economic Club of Washington. Those figures, he said, “do add to confidence” that inflation is slowing sustainably.
Powell declined to provide any hints of when the first rate cut would occur. But most economists foresee the first cut occurring in September, and after Powell’s remarks Wall Street traders boosted their expectation that the Fed would reduce its key rate then from its 23-year high. The futures markets expect additional rate cuts in November and December.
“Today,” Powell said, “I’m not going to send any signals on any particular meeting.”
Rate reductions by the Fed would, over time, reduce consumers’ borrowing costs for things like mortgages, auto loans, and credit cards.
Last week, the government reported that consumer prices declined slightly from May to June, bringing inflation down to a year-over-year rate of 3%, from 3.3% in May. So-called “core” prices, which exclude volatile energy and food costs and often provide a better read of where inflation is likely headed, climbed 3.3% from a year earlier, below 3.4% in May.
In his remarks Monday, Powell stressed that the Fed did not need to wait until inflation actually reached 2% to cut borrowing costs.
“If you wait until inflation gets all the way down to 2%, you’ve probably waited too long,” Powell said, because it takes time for the Fed’s policies to affect the economy.
After several high inflation readings at the start of the year had raised some concerns, Fed officials said they would need to see several months of declining price readings to be confident enough that inflation was fading sustainably toward its target level. June was the third straight month in which inflation cooled on an annual basis.
After the government’s latest encouraging inflation report Thursday, Mary Daly, president of the Fed’s San Francisco branch, signaled that rate cuts were getting closer. Daly said it was “likely that some policy adjustments will be warranted,” though she didn’t suggest any specific timing or number of rate reductions.
In a call with reporters, Daly struck an upbeat tone, saying that June’s consumer price report showed that “we’ve got that kind of gradual reduction in inflation that we’ve been watching for and looking for, which ... is actually increasing confidence that we are on path to 2% inflation.”
Many drivers of price acceleration are slowing, solidifying the Fed’s confidence that inflation is being fully tamed after having steadily eased from a four-decade peak in 2022.
Thursday’s inflation report reflected a long-anticipated decline in rental and housing costs. Those costs had jumped in the aftermath of the pandemic as many Americans moved in search of more spacious living space to work from home.
Hiring and job openings are also cooling, thereby reducing the need for many businesses to ramp up pay in order to fill jobs. Sharply higher wages can drive up inflation if companies respond by raising prices to cover their higher labor costs.
Last week before a Senate committee, Powell noted that the job market had “cooled considerably,” and was not “a source of broad inflationary pressures for the economy.”
veryGood! (24528)
Related
- How to protect your Social Security number from the Dark Web
- American Eagle’s Dropped Early Holiday Deals – Save Up to 50% on Everything, Styles Start at $7.99
- Study: Weather extremes are influencing illegal migration and return between the U.S. and Mexico
- Whoopi Goldberg Details Making “Shift” for Sister Act 3 After Maggie Smith’s Death
- Olivia Munn began randomly drug testing John Mulaney during her first pregnancy
- 13-year-old arrested after 'heroic' staff stop possible school shooting in Wisconsin
- Rob Sheffield's new book on Taylor Swift an emotional jaunt through a layered career
- Kentucky coal firm held in contempt again over West Virginia mine pollution
- West Virginia expands education savings account program for military families
- Video captures mountain lion in Texas backyard; wildlife department confirms sighting
Ranking
- Mike Tyson impresses crowd during workout ahead of Jake Paul fight
- Flooding closes interstate as heavy rains soak southeast Georgia
- Partial list of nominees for the 2025 Grammy Awards
- Southern California wildfire destroys 132 structures as officials look for fierce winds to subside
- The Daily Money: Markets react to Election 2024
- American Eagle’s Dropped Early Holiday Deals – Save Up to 50% on Everything, Styles Start at $7.99
- Despite Climate Concerns, Young Voter Turnout Slumped and Its Support Split Between the Parties
- Hungary’s Orbán predicts Trump’s administration will end US support for Ukraine
Recommendation
-
Zendaya Shares When She Feels Extra Safe With Boyfriend Tom Holland
-
Southern California wildfire destroys 132 structures as officials look for fierce winds to subside
-
Officials outline child protective services changes after conviction of NYPD officer in son’s death
-
Target's 'early' Black Friday sale is underway: Here's what to know
-
Top Federal Reserve official defends central bank’s independence in wake of Trump win
-
Kasha-Katuwe Tent Rocks National Monument in New Mexico is set to reopen
-
Prince William Says Princess Charlotte Cried the First Time She Saw His Rugged Beard
-
Officials outline child protective services changes after conviction of NYPD officer in son’s death