Fed Chair Powell: Progress Made on Inflation, But More Work Needed
Jerome Powell, Chair of the Federal Reserve, recently stated that while the central bank has made progress in reducing inflation, more work remains to be done.
In his testimony before the House Financial Services Committee on Wednesday, Powell acknowledged that inflation has declined from 2.6% last year, but emphasized that the target has not yet been reached.
"We want to keep policy restrictive for now," Powell said, indicating that interest rates will continue to be elevated in the near future.
Recent consumer price index data showed unexpected price increases at the start of the year, with the core CPI excluding food and energy rising 0.4% in January, the highest increase since March. This increase was driven by rising costs in housing, prescription drugs, car insurance, and groceries, particularly egg prices.
Despite cutting borrowing costs by a percentage point since September, Fed policymakers are now pausing to assess the economy and inflation trends.
Powell reiterated that the Fed will make policy decisions based on economic data rather than political statements. He also noted that the Fed's role is not to comment on the effectiveness of policies enacted by Congress or the administration, but that potential changes in tariffs, immigration, fiscal policy, and regulation could impact interest rate decisions.
Powell expects to complete a review of the Fed's long-term policy strategy later this year.