- ORIGINAL NEWS
Fed Chair Powell says there has been a ‘lack of further progress’ this year on inflation
- SUMMARY
Despite the strong overall economy, Federal Reserve Chair Jerome Powell expressed concern that inflation remains stubbornly above the central bank’s target of 2%.
Recent data suggests it will take longer than expected to bring inflation under control.
As a result, the Fed is unlikely to cut interest rates anytime soon.
Interest rates have been raised 11 times in a row since March 2022 to combat inflation.
The Fed’s benchmark interest rate is now in the highest range in 23 years.
Powell noted that while inflation has been declining from its peak in mid-2022, it has been trending higher since October 2023.
Consumer price inflation is currently running at an annual rate of 3.5%, well above the Fed’s target.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, also remains elevated, with core inflation at 2.8% in February.
Powell stated that the Fed will need greater confidence that inflation is moving sustainably towards 2% before considering easing policy, which means maintaining the current level of interest rates.
Powell’s comments sent Treasury yields and stock prices lower.
The benchmark two-year note, sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose half a percentage point.
The S&P 500 fell after being positive earlier in the session, though the Dow Jones Industrial Average held positive.
- NEWS SENTIMENT CHECK
- Overall sentiment:
neutral
Positive
“Powell said that while inflation continues to make its way lower, the current state of policy should remain intact.”
“Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.””
Negative
“Fed Chair Jerome Powell said the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal…”The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said.”
“That was the result of 11 consecutive rate hikes that began in March 2022.”