Federal Reserve Chair Jerome Powell stated on Tuesday that the central bank is unlikely to raise its main interest rate despite ongoing concerns about stubborn inflation. He emphasized his belief that inflationary pressures would begin to decrease again soon.
However, Powell, speaking at a panel discussion in Amsterdam, admitted that his confidence in inflation easing has weakened because prices have remained consistently high in the first quarter of this year.
Powell emphasized that the Fed’s preferred approach is to maintain the current high benchmark rate rather than increasing it.
Based on current data, Powell expressed skepticism that the Fed’s next move would be to raise rates. He suggested it is more probable that they will maintain the policy rate at its current level.
Jerome Powell (Via Justin Lambert/Shutterstock)
Financial markets and economists had been anticipating potential rate cuts from the Fed this year, especially since inflation has significantly decreased from its peak in 2022. Despite this, Powell and other Fed officials have indicated that a rate cut is unlikely in the near future, given the persistent inflationary pressures.
Powell’s comments came shortly after a report revealed an increase in wholesale inflation in April. The government is expected to release its latest consumer inflation report on Wednesday, which is anticipated to show a slight cooling in price growth last month.
Regarding the wholesale price report, Powell downplayed its significance, noting that while some costs like airfares, hospital visits, and car insurance decreased last month, the inflation data was mixed rather than alarmingly high.
