Fed's Powell says more 'good' inflation data would bolster the case for rate cuts
What recent data encouraged Federal Reserve policymakers?
Recent data that encouraged Federal Reserve policymakers includes signs of inflation receding, with the May personal consumption expenditures index showing inflation cooling to 2.6%, down from a high of 7.1%. Additionally, core prices, which exclude volatile measurements like food and energy, climbed 2.6%, marking the slowest annual rate since March 2021.
How does Powell describe recent inflation progress?
Powell describes recent inflation progress as showing "modest further progress" with incoming data suggesting inflation is moving sustainably toward the Federal Reserve's 2% target. However, he emphasizes the need for more confidence in this trend before considering interest rate cuts.
What did Powell say about rate cuts in his Senate testimony?
In his Senate testimony, Federal Reserve Chair Jerome Powell said that policymakers have been encouraged by recent data suggesting inflation is receding, and continued progress would strengthen the case for an interest rate cut1. However, he emphasized that the Fed needs more confidence that inflation is falling sustainably to 2% before cutting rates. Powell also highlighted the risks of cutting rates too soon or waiting too long, as both could negatively impact the economy.