WASHINGTON – Federal Reserve Chair Jerome Powell addressed concerns over inflation during a public appearance on Tuesday, marking his first statement since the Fed’s preferred inflation gauge showed prices rising at the slowest pace in more than three years.
Powell expressed cautious optimism about the recent data trend, acknowledging that it has been moving in the right direction. Despite the encouraging signs of cooler inflation, Powell emphasized the importance of waiting for more evidence before considering any potential interest rate cuts.
Speaking at a panel in Portugal for a European Central Bank conference, Powell highlighted the latest inflation readings, with the “core” Personal Consumption Expenditures (PCE) index rising 2.6% in May. This figure was in line with expectations and down from 2.8% in April. The month-over-month inflation measure also showed a slight decrease from April to May.
While the recent data supported the possibility of rate cuts later in the year, Powell indicated that the central bank is unlikely to make any changes at its upcoming meeting in late July. He refrained from speculating on the potential for rate cuts as soon as September, emphasizing the need for more time and evidence to ensure sustained movement towards the 2% inflation target.
Powell underscored the importance of monitoring underlying inflation trends and emphasized the significance of a strong job market in the decision-making process. Despite making notable progress, he emphasized the need to accurately assess the current inflation levels to make informed policy decisions moving forward.