Powell: US inflation is easing, but Fed won’t cut rates yet

U.S. inflation is slowing again after higher readings earlier this year, the head of the Federal Reserve said Tuesday. Federal Reserve (Fed), Jerome Powell, adding that more evidence of this kind would be needed before the Fed cuts interest rates.

Following some reports of persistently high inflation in early 2024, he said Powellthe data for April and May “Yes, they suggest that we are returning to a disinflationary path.”.

During a monetary policy conference in Sintra, Portugalthe head of the U.S. central bank indicated that Fed officials still want to see annual price growth slow further toward their 2% target before they feel confident they have fully defeated high inflation.

“We just want to understand that the levels we are seeing are a real reading of underlying inflation.“, he added. Unlike general inflation, core inflation does not include the volatile prices of food and fuel.

“Unsustainable” path

The Fed president also noted that the deficit path his country is on “It is unsustainablePowell participated in a panel organized in Portugal by the European Central Bank (ECB), where he was asked about how the outcome of the November presidential election, where the current president, Joe Biden, is running for a second term against Republican Donald Trump, could influence the US economy.

The Fed chief declined to comment on policy developments but issued a warning to U.S. leaders and candidates: “I would say in general terms that the United States has a very large deficit at a time when we are at full employment, and it is not that the level of debt is unsustainable, it is the path we are on that is unsustainable.“, he said.

He stressed that this is not something that is controversial and should be treated as a high-level issue by policymakers.

Powell He stressed that we would have to see how to return to a “sustainable path“debt because this type of deficit is not tolerable in times of economic and fiscal prosperity for a long period of time.

“I can’t speak to the timing but in the long run we will have to do something sooner or later, and sooner is better than later.“, considered.

Last Thursday, the International Monetary Fund warned that rising US budget deficits and debt pose “a growing risk” to the global economy.

Currently, the federal debt of the North American country is above US$ 34.5 billion.

With information from AP and EFE