Federal Reserve Chair Jerome Powell addressed the Economic Club of Washington D.C., stating that the central bank will not delay interest rate cuts until inflation reaches 2%.
Powell emphasized that due to the time lag in the impact of central bank policies, waiting for inflation to hit 2% might be too late as continued tightening measures could push inflation below the target level.
Powell stressed that the Fed is seeking stronger confidence in the return of inflation to the 2% threshold. He noted that positive inflation data in recent times has contributed to this growing confidence while also expressing his belief that a “hard landing” for the U.S. economy is unlikely.
The current target range for the federal funds rate, a crucial gauge in influencing the cost of borrowing across the economy, stands at 5.25% to 5.50%, a significant increase from the range of 0% to 0.25% observed during the Covid-19 pandemic and 1.50% to 1.75% pre-pandemic.
