Current:Home > MarketsFed Chair Powell: Slower economic growth may be needed to conquer stubbornly high inflation-Angel Dreamer Wealth Society D1 Reviews & Insights
Fed Chair Powell: Slower economic growth may be needed to conquer stubbornly high inflation
View Date:2024-12-23 16:24:13
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell said Thursday that inflation remains too high and that bringing it down to the Fed’s target level will likely require a slower-growing economy and job market.
Powell noted that inflation has cooled significantly from a year ago. But he cautioned that it’s not yet clear whether inflation is on a steady path back to the Fed’s 2% target.
“A few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in remarks to the Economic Club of New York. “We cannot yet know how long these lower readings will persist or where inflation will settle over coming quarters.”
Last month, Fed officials predicted that they would impose one more interest rate hike before the end of the year, on top of a series of 11 rate increases that have lifted their key rate to about 5.4%, its highest level in 22 years. Economists and Wall Street traders expect the central bank to leave rates unchanged when it next meets in about two weeks.
Other news
Home sales fell again in September as surging mortgage rates, rising prices discouraged homebuyers
Young lobsters show decline off New England, and fishermen will see new rules as a result
Inflation in UK unchanged at 6.7% in September, still way more than Bank of England’s target of 2%
What it will do after that is less clear. In his remarks Thursday, Powell echoed other Fed officials in suggesting that the economy is at a turning point: If growth remains as healthy as it has been since this summer, additional rate hikes could be needed. But any sign of weaker growth or hiring could help slow inflation and allow the Fed to keep rates unchanged.
Beginning in March 2022, the Fed’s inflation fighters have raised their benchmark rate at the fastest pace in four decades. Those rate hikes have led to much higher borrowing rates across the economy, tightening the financial pressures on households and companies.
A string of Fed officials have recently signaled that a rapid increase in longer-term rates, including for the average 30-year fixed mortgage, which is nearing 8%, will likely cool the economy and help slow inflation. This would allow the central bank to stay on hold and observe how growth and inflation evolve in the coming months.
But several recent economic reports have suggested that the economy is still growing robustly and that inflation could remain persistently elevated, which could require further Fed action.
“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing,” Powell said, “could put further progress on inflation at risk and could warrant further tightening of monetary policy.”
In September, hiring was much greater than had been expected, with the unemployment rate staying near a half-century low. Strong hiring typically empowers workers to demand higher wages, which, in turn, can worsen inflation if their employers pass on the higher labor costs by raising their prices.
Yet so far, Powell noted that wage growth has slowed. Other measures of the job market are also cooling, a trend that could keep inflation contained. Indeed, even with solid economic growth, inflation has largely decelerated: The Fed’s preferred measure of price changes eased to 3.5% in September compared with 12 months earlier, down sharply from a year-over-year peak of 7% in June 2022.
On Wednesday, Christopher Waller, an influential member of the Fed’s governing board, suggested that the slowdown in inflation even as the economy has remained healthy is “great news” but also “a little too good to be true.” He noted that growth could either slow, helping cool inflation, or remain strong, fueling higher inflation and requiring further rate hikes by the Fed to contain it.
“It is too soon to tell,” Waller said. “I believe we can wait, watch and see how the economy evolves before making definitive moves.”
veryGood! (291)
Related
- How Leonardo DiCaprio Celebrated His 50th Birthday
- 'Thickest black smoke': 36 dead, thousands flee as Hawaii wildfires rage in Maui. Live updates
- Ex Try Guys Member Ned Fulmer Spotted at Taylor Swift Concert With Wife One Year After Cheating Scandal
- Fire on Hawaii's Maui island forces people to jump into water to flee flames
- Dogecoin soars after Trump's Elon Musk announcement: What to know about the cryptocurrency
- Coach parent Tapestry buying Capri, owner of Michael Kors and Versace, in $8.5 billion deal
- Hilary Swank Proves She’s Living Her Best “Cool Mom” Life With Glimpse Inside Birthday Celebration
- Lincoln Center to present 60 performances in fall/winter season
- Police cruiser strikes and kills a bicyclist pulling a trailer in Vermont
- Taylor Swift announces October release of ‘1989 (Taylor’s Version)’ at Eras Tour show in Los Angeles
Ranking
- Jennifer Garner and Boyfriend John Miller Are All Smiles In Rare Public Outing
- Nearly 100 arrested in global child sex abuse operation launched after murder of FBI agents
- Dating burnout is real: How to find love while protecting your mental health
- Gigi and Bella Hadid’s Sister Alana Makes Runway Debut During Copenhagen Fashion Week
- Florida education officials report hundreds of books pulled from school libraries
- Auto shoppers may be getting some relief as 2023 finally sees drop in new car prices
- Austin Majors, former child star on 'NYPD Blue,' cause of death ruled as fentanyl toxicity
- Bill Maher Ken-not with Barbie fighting the patriarchy: 'This movie is so 2000-LATE'
Recommendation
-
U.S.-Mexico water agreement might bring relief to parched South Texas
-
Taylor Swift tops list of 2023 MTV Video Music Award nominations
-
The FAA, lacking enough air traffic controllers, will extend limits on New York City-area flights
-
Texas woman Tierra Allen, TikTok's Sassy Trucker, leaves Dubai after arrest for shouting
-
Mark Zuckerberg Records NSFW Song Get Low for Priscilla Chan on Anniversary
-
Ex Try Guys Member Ned Fulmer Spotted at Taylor Swift Concert With Wife One Year After Cheating Scandal
-
Boot up these early Labor Day laptop deals on Apple, Samsung, Acer and more
-
Biden orders restrictions on U.S. investments in Chinese technology