US Federal Reserve Chairman Says Rates Policy Need More Time

Federal Reserve Chairman Jerome Powell expected inflation to continue to decline until 2024, as happened last year, although his confidence in this happening declined after prices rose faster than expected during the first quarter.

“I expect inflation to decline again...on a monthly basis to levels that are very similar to the low readings we saw last year...I would say that my confidence in that is not as high as it was,” Powell said during a banking event in Amsterdam. He continued: "We will need more time to ensure that inflation declines."

However, Powell added that it was unlikely that the Federal Reserve would have to raise interest rates again, and reiterated, as it did after the last meeting of the Council, that the central bank would be “patient” and allow the full impact of the current interest rate to be achieved, according to “Reuters.”

Powell said, "I do not think it is likely, based on the data available to us, that our next step will be to raise interest rates... Most likely... we will keep the interest rate as it is. We did not expect the road to be easy," he added.

Powell's comments come shortly after new data showed producer prices rose faster than expected in April, a possible sign of increasing pressure on consumer prices.

But Powell made clear that he believed the data was “quite mixed,” noting that input prices for previous months had been revised downward.

The Federal Reserve has kept its benchmark interest rate unchanged in a range of 5.25% to 5.5% since July.

Data on Tuesday showed US producer prices rose more than expected in April amid strong gains in the costs of services and goods, indicating that inflation remains high in the early second quarter.

Borrowing costs in the United States have remained at high levels since late July in efforts to curb high inflation. But consumer price data in the United States, expected to be released tomorrow, Wednesday, will have a greater impact on the timing of the highly anticipated interest rate cut, which may stimulate economic growth.

Federal Reserve Chairman Jerome Powell said on Tuesday that the latest report on producer prices in the United States was more “mixed” than “high,” given that previous data was revised downward, even with April data being higher than expected. .

“I wouldn't say it's high, I would say it's mixed,” Powell added during an event in Amsterdam after the Labor Department released producer price index data in April.

Powell said, "We will know in time," in response to a question about whether the recent wave of inflation, which exceeded expectations, might mean that the key interest rate does not place enough restrictions to return inflation to the 2% level targeted by the US Central Bank. But he added that he does not expect the central bank's next move on interest rates to be an increase.

He added that this is more likely to mean that interest rates will remain in the range between 5.25 and 5.50% for a longer period than previously expected.

It is worth noting that inflation in the United States rose slightly during March, but this will likely not change the financial markets’ expectations that the Federal Reserve (the US central bank) will postpone lowering interest rates until September.

The Bureau of Economic Analysis at the US Department of Commerce stated that the personal consumer spending index rose 0.3% last month. There was no amendment to the February data to show that the index rose by 0.3%, as previously reported.

On an annual basis, inflation rose 2.7% through March after rising 2.5% through February.