Governor Jerome Powell's comments confirm analyst estimates that the central bank will begin lowering key interest rates this year.
of the United States the head of the central bank, the Fed Jerome Powell according to the central bank is not far from having enough confidence to start lowering interest rates.
Powell said Thursday in the US Senate that the Open Market Committee, which decides the country's monetary policy, has been right to wait for evidence of a slowdown in inflation.
“We expect to get more certainty that inflation is slowing down toward two percent,” Powell told senators, according to Reuters. The central bank's inflation target is two percent.
“When we gain confidence in that – and we're not far from that – it's appropriate to start lowering the interest rate so that we don't push the economy into recession,” he continued.
Powell's comments confirm analyst estimates that the central bank will begin lowering key interest rates in the coming months this year.
Director general Powell repeated in the Senate hearing that it is appropriate to lower interest rates at some point this year, but stressed that the Fed's decision makers are not yet ready for that.
The central bank quickly raised its key interest rates by more than five percentage points from March 2022 to last July. The purpose was to slow down rapid inflation.
The Fed has since kept its interest rate in the range of 5.25–5.50 percent, i.e. at the highest level in more than twenty years.
According to the most recent data, inflation based on private consumption prices was 2.4 percent. At its fastest, it was seven percent in 2022.
Consumption-linked PCE inflation is considered the Fed's preferred inflation measure.
The Fed the next meeting to decide on monetary policy is a little over a week from the 19th to the 20th. March.
Economists widely expect the central bank to keep interest rates unchanged at its March meeting.
The central bank is expected British newspaper Financial Timesto make three or four interest rate cuts in the second half of the current year.
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