Powell: “The data supports the Fed’s view that lowering inflation will take some time”

The president of the Federal Reserve American (Fed), Jerome Powellinsisted this Friday that his institution remains committed to the mission of returning inflation to 2% in the United States and He said economic data continues to point to it taking time.

“So far, the data have continued to support the committee’s view that it will take some time to bring inflation down,” he said at a public event in Washington.

However, Powell acknowledged that “the banking tensions” that arose in early March, with the failure of several banks, “possibly have meant that our rate does not need to increase as much as it would have needed” if the banking crisis had not occurred. “Of course, the extent of that is very uncertain,” he said.

“While financial stability tools have helped calm conditions in the banking sector, developments are contributing to tighter credit conditions and are likely to weigh on economic growth,” he said.

Still, he insisted, “the committee is so strongly committed to the research that it is coming back to our 2% goal.”

“We believe that failure to reduce inflation would not only prolong the pain, but would also ultimately increase the social costs of returning to price stability, causing even greater damage to families and businesses.” he added.

Aware of what his words can affect the markets, Powell was supported at all times by a speech written on sheets of paper, in a dialogue in which he was accompanied by former Fed director Ben Bernanke.

And he offered no light on what the Federal Reserve’s next decision will be, whether they will decide to continue raising rates or take a pause. The next meeting of the Federal Open Market Committee (FOMC) of the Fed will take place on June 15 and 16.

The interannual rate of inflation in the United States fell again in April, for the tenth consecutive month, and stood at 4.9%, although it was only down one tenth compared with March.

Since it reached its peak of 9.1% in June 2022, inflation has been falling, as a result of the increases that seek to cool the economy.
The last, the tenth increase, took place at the beginning of May and was 0.25 points, so interest rates currently sit in a range of between 5 and 5.25%.

After announcing it, Powell explained that future rate hikes will depend on the macroeconomic figures recorded by the country in the coming weeks and that data such as unemployment or the inflation rate will be essential to decide whether to stop the rises.