Fed Chairman: 'Inflation remains too high'

US Federal Reserve Chairman Jerome Powell stated that inflation has cooled, but the agency remains committed to its 2% target.

In a speech on October 19 in New York, Jerome Powell acknowledged that the tightening policy had brought inflation under control, but stressed that the Fed still needed to exercise caution in pursuing its goal.

"Inflation remains too high. A few months of good data are just the beginning of a period where we can be confident that inflation is returning to target. But we still don't know how long these good figures will last, or where inflation will be in the coming quarters," he said. He affirmed that Fed officials are "unanimously committed to bringing inflation down to 2%."

This speech raises questions about the Fed's future policy following a series of consecutive interest rate hikes. The Fed has raised rates 11 times since March 2022, to the current 5.25%, the highest level in 22 years.

Federal Reserve Chairman Jerome Powell in a speech on October 19. Photo: Reuters — Federal Reserve Chairman Jerome Powell in a speech on October 19. Photo: *Reuters*

Nevertheless, Powell argued that current interest rates are not too high. "Is policy too tight? I don't think so." However, he acknowledged that "rising interest rates are difficult for everyone."

The Fed also stressed that its recent targets have yielded good results. Inflation in September is now at 3.7%, a sharp drop from over 9% in the middle of last year. "Recent data shows progress on both of our goals: maximizing employment and stabilizing prices. The economy is still handling things quite well," he said.

However, these comments came on the same day as a report showing that the number of people applying for unemployment benefits last week was the lowest since the beginning of the year. This suggests a tightening labor market, which could put upward pressure on inflation.

In recent days, several Fed officials have indicated that the agency may pause interest rate hikes. Even the most staunchest hawkish members believe the Fed will wait to see the impact of previous rate hikes on the economy. The market now also expects the Fed to stop raising interest rates, at least for now.

The question now is when they will begin cutting interest rates. "Given the environment's risks and uncertainties, we will be more cautious. The Fed will make decisions based on upcoming data, as well as the outlook and risks," Powell said.

Ha Thu (according to CNN)

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