MNI BRIEF: Fed's Powell-Need More Good Inflation Data For Rate Cuts
MNI (WASHINGTON) - The Federal Reserve needs more good data on inflation to gain enough confidence to begin cutting interest rates, and could also move to reduce borrowing costs if unemployment spiked unexpectedly, Fed Chair Jerome Powell said Wednesday.
"I do have some confidence of that, I think we have seen that over the last several years. The question is are we sufficiently confident that it is moving sustainably down to 2% and I'm not prepared to say that yet," Powell said in Congressional testimony, when asked whether he has confidence that inflation is on a downward trajectory. He added the Fed is not looking for inflation to dip below 2% for some time to achieve an average of 2% and he repeated that the Fed is not looking for inflation to reach 2% before considering interest rate cuts.
"What we said is that we want to be more confident. We want to have greater confidence. That means more good inflation readings," he said. "We also have an employment mandate. So I could also see us cutting ... if we saw unexpected weakening in the labor market." (See MNI POLICY: Fed Policy Looks Tight, Bolstering Case For Cuts)