Inflation may be cooling — just not yet fast enough for the Federal Reserve
Chair Jerome Powell offered a nuanced view Wednesday of how the Fed intends to address its core challenge at a time when inflation is bothbut still well above the central bank's 2% target: Give it more time, and maybe some help from additional interest rate hikes.
how higher borrowing rates have affected inflation and the economy. They also want to see whether the collapse of three large banks this spring will weigh on lending and growth. Powell noted that many economists expect rental costs, a key driver of current inflation, to steadily decline in the coming months. He also said wage growth has slowed and noted some signs that the job market is cooling. Those factors, he added, should“I would almost say that the conditions that we need to see in place to get inflation down are coming into place,” Powell said. “But the process of that actually working on inflation is going to take some time.”, down sharply from a 9.
Still, Powell stopped short of saying the Fed's policymakers have committed to resuming their hikes when they next meet in late July. At one point in the news conference, he referred to Wednesday's decision as a “skip,” which would imply that the Fed planned to raise rates at the July meeting.
“With inflation set to moderate noticeably, we are skeptical that the Fed will resume hiking interest rates,” Ryan Sweet, chief U.S. economist of Oxford Economics, wrote in a note. “Our baseline forecast is for the Fed to remain on hold through the remainder of this year before gradually easing in early 2024.”
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