During his recent speech, Federal Reserve Chairman Jerome Powell emphasized the importance of monitoring inflation trends, noting a potential return to a disinflationary path based on recent data.
Powell highlighted the Fed’s need for increased confidence in inflation sustainably reaching the 2% target before considering any policy adjustments. While acknowledging progress in addressing inflation, Powell expressed the necessity for further assurance before implementing cuts. Projections indicate that headline PCE inflation could reach the mid to low 2% range within a year, with expectations for a return to 2% inflation by late next year or the following year.
Powell also underscored the Fed’s caution in timing any policy changes to avoid undermining the ongoing economic recovery. When discussing interest rates, he noted uncertainty regarding their trajectory, emphasizing the importance of not acting prematurely or delaying adjustments.
Additionally, Powell clarified that the Fed is not currently utilizing Generative AI technology and highlighted the relatively low 4% unemployment rate as a point of consideration.
