New York, Oct. 19 (EFE) – United States Federal Reserve (Fed) President Jerome Powell reiterated Thursday the intention to achieve a sufficiently restrictive policy to sustainably reduce inflation to 2% over time.
Speaking at the Economic Club of New York on Thursday, Powell delivered a cautious speech that followed the script of previous ones.
Powell said the Fed is “proceeding cautiously” and will make decisions based on “the totality of incoming data, the evolving outlook, and the balance of risks.”
He pointed to a number of uncertainties, such as whether inflation will continue to ease or whether prices will level off in the coming months.
There are also uncertainties about whether and how long it will take for financial markets, households, and businesses to feel the full impact of the steady increases in interest rates.
Powell also noted that given the rapid pace of adjustment, there may be significant adjustment ahead.
Members of the Federal Open Market Committee (FOMC), the Fed’s policy-setting body, have raised interest rates regularly since March 2022, with exceptions in June and September 2023.
Rates are now between 5.25% and 5.5%, the highest levels since 2001.
US inflation stagnated at 3.7% in September after spikes in July and August, following 12 consecutive months of decline from a peak of 9.1% in June 2022, all on an annualized basis.
In this regard, Powell considered that the inflation data is “still too high”, explaining that the September data continues the downward trend, although in some ways it was less encouraging.
Expectations that the Fed will keep interest rates high for longer, with the risks that entails for the economy, have pushed yields on the US benchmark bond to levels not seen in 16 years.
Powell noted that long-term bond yields have been an important driver of tightening and assured that the Fed is monitoring their evolution as persistent changes in financial conditions may have implications for monetary policy.
The next FOMC meetings are scheduled for October 31 and November 1. EFE