MNI BRIEF: Fed's Powell: Getting More Confident On Rate Cuts
Last three readings add to confidence that inflation is moving sustainably toward 2%, Fed chair says.
Federal Reserve Chair Jerome Powell said Monday the FOMC is getting more confident inflation is on its way to 2%, paving the way for lowering interest rates. Futures traders are placing nearly 90% odds on a rate cut in September.
"We've been very clear that you wouldn't wait for inflation to get all the way down to 2%. Our test has been for the past quite some time that we wanted to be have greater confidence that inflation was moving sustainably down toward our 2% target, and what increases that confidence in that is more good inflation data. And lately, we have been getting some of that," he told the Economic Club of Washington, D.C.
"We didn't gain any any additional confidence in the first quarter, but the three readings in the second quarter, including the one from last week, do add to that confidence."
The Fed chair noted the central bank will also react to unexpected weakening in the labor market, as risks to both its full employment and inflation mandates are now in "much better balance." (See MNI INTERVIEW: June CPI Seals Deal On Sept Fed Cut-Tilley)