Powell says Fed needs more inflation evidence before cutting interest rates
The Federal Reserve chairman delivers the keynote address at a Stanford University forum.
Federal Reserve Chair Jerome Powell on Wednesday stressed the need for more evidence that inflation is subsiding before policymakers move to cut interest rates.
«On inflation, it is too soon to say whether the recent readings represent more than just a bump,» Powell said in prepared remarks ahead of a question-and-answer session at Stanford University. «We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent.»
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Federal Reserve Chairman Jerome Powell speaks during a news conference in Washington, D.C., on March 22, 2023. (Al Drago/Bloomberg via / Getty Images)
Powell's remarks come amid some concern on Wall Street that progress on inflation is stalling out. While inflation has fallen considerably from a peak of 9.1%, progress has largely flatlined since the summer.
Policymakers have raised interest rates sharply over the past two years, approving 11 rate increases in the hopes of crushing inflation and cooling the economy. In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.
Fed officials are now grappling with when they should take their foot off the brake. Powell said officials are trying to balance the risks between cutting interest rates too soon, which risks setting off inflation again, or waiting too long to cut rates, which could weigh on the economy and possibly trigger a recession.
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The Federal Open
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