New York, USA.- The U.S. Federal Reserve still needs more data before cutting interest rates, to make sure recent weaker inflation readings give a true picture of what is happening with underlying price pressures, Federal Reserve Chairman Jerome Powell said Tuesday.
Data for May showed the Federal Reserve’s preferred measure of inflation did not rise at all that month, while the 12-month rate of price increases has slowed to 2.6 percent, still above the central bank’s 2 percent target but declining.
“We just want to understand that the levels we’re seeing are a true reading of what’s actually happening with underlying inflation,” Powell said at a monetary policy conference in Portugal sponsored by the European Central Bank.
“We want to be more confident and, frankly, because the American economy is strong (…) we have the opportunity to take our time.”
The Fed has kept its benchmark interest rate steady in the 5.25 percent to 5.5 percent range since last July, but policymakers are debating when to ease monetary policy as inflation moves back toward the central bank’s 2 percent target.
Inflation remains more than half a percentage point above that target, according to the Federal Reserve’s preferred personal consumption expenditures price index, and was described as “high” in the central bank’s June 12 monetary policy statement.
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