Fed Chair Powell Reassures Congress on Interest Rate Policy
Federal Reserve Chair Jerome Powell has asserted that the Fed is in no rush to adjust interest rates, maintaining a cautious stance amid persistent inflation and uncertainties stemming from the Trump administration's policies. In his semiannual appearance before the Senate Banking Committee, Powell stated, "With our policy stance now significantly less restrictive and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance."
Powell emphasized the Fed's commitment to carefully assess the trajectory of inflation and the impact of Trump's economic policies before making any changes to interest rates. He acknowledged the positive signs in the economy, including a strong job market, but noted that inflation remains elevated relative to the Fed's 2% target.
Regarding the recent scrutiny voiced by Tesla CEO Elon Musk, Powell defended the Fed's transparency and accountability. He clarified that the Fed follows a rigorous budgeting process, understanding its obligation to the public.
Powell reiterated the Fed's goal of achieving maximum employment and stable prices. He highlighted the importance of a balance in the job market to mitigate inflationary pressures. While the recent January jobs report showed continued resilience, economists anticipate that inflation data will need to cool further before the Fed lowers interest rates again.
The Consumer Price Index (CPI), which measures price changes excluding food and energy, is expected to have increased by 3.1% over the past year in January, lower than the 3.2% in December. Powell noted that inflation has moderated over the past two years but remains above the Fed's target.
The Fed is currently conducting a review of its monetary policy strategy, but Powell emphasized that the 2% inflation goal will be retained.