US Federal Reserve Chairman Jerome Powell said that the US economy continues to expand at a strong pace after not making progress towards the 2% inflation target in the first part of this year.
Powell added to Congress, "The latest monthly readings showed modest progress."
Powell indicated that keeping interest rates high for a long period may jeopardize economic growth, according to a report published by CNBC.
Powell defended the US economy, saying that it remains strong, as is the labor market, despite some recent slowdown. Powell cited some decline in inflation levels, which he said policymakers remain intent on bringing down to their 2% target.
“At the same time, in light of the progress made in reducing inflation rates and calming the labor market over the past two years, high inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy adjustment rates too late or too little may unduly weaken economic activity and employment.”
The Fed's borrowing rate is currently 5.25%-5.5%, the highest level in about 23 years and the product of 11 consecutive increases after inflation hit its highest level since the early 1980s.
Markets expect the Fed to begin cutting interest rates in September, likely to be followed by another quarter-point cut by the end of the year. However, FOMC members at their June meeting indicated only one cut.
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