Stock

Jerome Powell says inflation is still too high and lower economic growth is likely needed to bring it down

Federal Reserve Chairman Jerome Powell acknowledged recent signs of cooling inflation, but said Thursday that the slowing in price increases was not enough yet to determine a trend and that the central bank would be “resolute” in its commitment to its 2% mandate.

“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in prepared remarks for his speech at the Economic Club of New York. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.”

“While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent,” Powell added.

However, he also noted that progress made toward the Fed’s twin goals.

In recent days, data has shown that while inflation remains well above the target rate, the pace of monthly increases has decelerated and the annual rate has slowed to 3.7% from more than 9% in June 2022.

“Incoming data over recent months show ongoing progress toward both of our dual mandate goals —maximum employment and stable prices,” he said.

The speech was delayed at the onset by protesters from the group Climate Defiance who charged the dais at the club’s dinner and held up a sign saying “Fed is burning” surrounded by the words “money, futures and planet.”

Powell hinted the labor market and economic growth may need to slow to ultimately achieve the Fed’s goal.

“Still, the record suggests that a sustainable return to our 2 percent inflation goal is likely to require a period of below-trend growth and some further softening in labor market conditions,” Powell said.

The comments come the same day initial jobless claims hit their lowest weekly level since early in 2023, indicating that the labor market is still tight and could exert upward pressure on inflation.

Fed officials have been using interest rate hikes in part to try to level out a supply-demand imbalance in the jobs market. However, robust job creation in September and a slow pace of layoffs could put progress on inflation at risk.

“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” he said.

In recent days, other Fed officials have said they think the Fed can be patient from here. Even some members who favor tighter monetary policy have said they think the Fed can halt rate hikes at least for now while they watch the lagged impact the rate hikes are expected to have on the economy.

Markets widely expect the Fed to hold off on additional rate hikes, though there remain questions over when officials might begin cutting rates.

Powell was noncommittal on the future of policy.

Given the uncertainties and risks, and how far we have come, the Committee is proceeding carefully. We will make decisions about the extent of additional policy firming and how long policy will remain restrictive based on the totality of the incoming data, the evolving outlook, and the balance of risks,” he said.

More from CNBC:

Big banks are quietly cutting thousands of employees, and more layoffs are comingSeptember home sales drop to the lowest level since the foreclosure crisisAmerican Airlines posts third-quarter loss and trims 2023 profit forecast

This post appeared first on NBC NEWS

You May Also Like

Latest News

The presidents of Spain’s regional soccer federations are calling for the resignation of Luis Rubiales, the suspended president of the National Football Association, in...

Latest News

Luis Rubiales on Sunday resigned from his position as president of the Spanish soccer federation following weeks of fierce criticism over his unwanted kiss...

Editor's Pick

When searching for world-class gold deposits, mining companies prefer high-grade, near-surface mineralization. Epithermal gold deposits check these boxes and more. While gold is often...

Editor's Pick

Overview A lot can change in two years — just look at Brazil. Best described as a bit player in the lithium space only...

Disclaimer: dividendsgrowth.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2024 dividendsgrowth.com