Powell says the new Inflation Data Show Fed has more work to do
(Bloomberg) – Federal Reserve Chairman Jerome Powell said the latest consumer pricing data shows that central banks can do much more while making significant progress in adjusting inflation Ta.
Most of them read from Bloomberg
“We’re close, but I don’t think so about inflation,” Powell told the House Financial Services Committee on Wednesday. “Last year, inflation was 2.6%, which was a huge progression, and we’re not there yet,” Powell said.
“So we want to maintain policy restrictions for now,” he adds, suggesting that interest rates will continue to rise in the near future.
Fresh data on Wednesday shows consumer prices have risen more than expected at the beginning of the year. The so-called core consumer price index, which excludes food and energy costs, rose 0.4% in January, the biggest advance since March.
Following new data, the interest rate swap showed traders expect a quarter-point rate cut this year. Before the CPI report, the traders were leaning towards two cuts.
Powell admitted that CPI readings outweighed almost all predictions, but he warned against overreactions.
“We don’t get excited about one or two good reads, we don’t get excited about one or two bad reads,” he said.
Nevertheless, new data adds to years of price increases, exacerbating the continued difficulties of millions of Americans struggling to increase their pay to cover higher costs of living. They also highlight the difficulties the Fed encountered in ending the post-Covid price surge.
Powell’s single-minded goal was to curb inflation without significantly damaging growth and work after a surge to four-year highs in 2022. Inflation bursts are rarely achieved, and the so-called soft landing after an astonishing victory.
Trump’s policy
And President Donald Trump’s plan to impose widespread tariffs, cut taxes and limit immigration could be complicated.
Earlier this week, Trump ordered a 25% tariff on steel and aluminum imports, bringing a 10% duty on all Chinese imports and taxation of goods from Canada and Mexico. He also threatens mutual tariffs on countries taxed on US imports.