Despite solid growth and continuing job gains, the US economy will see inflation fall even further below the central bank’s two percent goal, at least for a time, Federal Reserve Chairman Jerome Powell said Tuesday.
Despite solid growth and continuing job gains, the US economy will see inflation fall even further below the central bank’s two percent goal, at least for a time, Federal Reserve Chairman Jerome Powell said Tuesday.
That forecast added weight to the Fed’s recent announcements that it will be “patient” before making any further changes in the benchmark borrowing rate, a stance Powell re-emphasized in semi-annual testimony before the US Senate Banking Committee.
“Recent declines in energy prices will likely push headline inflation further below the… longer-run goal of 2 percent for a time,” he said.
The US central bank increased the key policy interest rate four times last year but rising uncertainty, especially around the US trade confrontation with China, amplified concerns about slowing global growth and fears the Fed was moving too aggressively.
And with no sign of rising inflation, that prompted the Fed to signal clearly for the past several weeks that it would tread carefully.
Many economists now do not expect any increase this year, while a few say the next move could be a cut if the economy slows further.
Noting the Fed’s preferred annual inflation measure sits at 1.7 percent, Powell said “the extent and timing of any further rate increases would depend on incoming data and the evolving outlook.
