In his prepared remarks for the semiannual testimony to Congress, Fed Chair Jerome Powell reiterated that it is not appropriate to cut interest rate until there is “greater confidence” that inflation is moving sustainably toward 2%.
Nevertheless, He noted that recent inflation readings have shown “modest further progress,” and that “more good data” would strengthen this confidence.
Powell emphasized the Fed’s “meeting by meeting” decision-making process, warning that reducing policy restraint “too soon or too much” could “stall or even reverse the progress” on inflation.
Yet, he also acknowledged that, with significant progress made in lowering inflation and cooling the labor market over the past two years, “elevated inflation is not the only risk” faced by the Fed. Delaying policy adjustments “too late or too little” could “unduly weaken economic activity and employment.”
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