Powell: there will be no rate reduction until we have “greater confidence” about inflation

The president of the Federal ReserveJerome Powell assured this Wednesday at the end of the meeting that decides the course of US monetary policy that there will be no reduction in interest rates from the current level to “that there is no greater confidence that the inflation moves sustainably towards 2%”.

Powell spoke after his organization communicated its decision to maintain rates in the current range of 5.25 to 5.5%, but pointed to the possibility of a cut in the remainder of the year, two less than those planned in March and one less than expected by analysts until now.

The Fed Open Market Committee expects the inflation indicator they monitor to be 2.6% at the end of this year and reach 2.3% in 2025, while the pace of lowering interest rates will not be as rapid as the one expected in March for this year and next.

“We need more confidence about inflation and better inflation data will certainly help“, he indicated Powellwhich refused to say whether the drop of a quarter point could arrive in September.

The Fed has four more meetings scheduled for the remainder of the year, while the macroeconomic data projections remain relatively stable, with a growth of 2.1% in the Gross Domestic Product (GDP) and unemployment at 4%, with a labor market that continues to hire.

This same Wednesday it was known that the Consumer Price Index (CPI) of the United States fell one tenth in May to 3.3% compared to April, so the data has been stuck above the Fed’s 2% objective all year.

In turn, in the last 12 months the increase in core inflation, which excludes the volatile prices of energy and food, was 3.4%, two tenths below April, and the lowest figure since April 2021

“Today’s inflation data has been better than most expected“Powell indicated, although the Fed looks at another price index known as PCE.