Inflation is slowing steadily, but it’s too early to declare victory or to discuss when the Federal Reserve might cut interest rates, Chair Jerome Powell said in prepared remarks Friday.
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Christopher Waller, a member of the Federal Reserve Board of Governors, cautioned that inflation is still too high and that it’s not yet certain if a recent slowdown in price increases can be sustained.
At the same time, in a panel discussion at the International Monetary Fund, Powell did not rule out another rate hike to help reduce inflation to the Fed’s 2% target level.
Policymakers are grappling with how much more pressure to keep on an economy that has largely shrugged off the central bank’s moves to slow it down.
Besides making it more expensive for U.S. homebuyers to buy a house with a mortgage, higher yields also put downward pressure on prices for everything from stocks to cryptocurrencies. Eventually, they could help cause companies to lay off more workers.
Federal Reserve Chair Jerome Powell said Thursday that inflation remains too high.
Federal Reserve officials regarded the U.S. economy’s outlook as particularly uncertain last month, according to minutes released Wednesday, and said they would “proceed carefully.”
The U.S. labor market remains strong despite higher interest rates—perhaps too strong for the inflation fighters at the Federal Reserve.
The Federal Reserve signaled one more hike was possible this year, as central bankers shift their focus toward how long they’ll keep rates high and when they’ll decide there has been enough progress on their inflation fight.
Further clues about the future path of the Fed’s interest rate policy could emerge at a news conference Wednesday after the central bank issues a policy statement and its quarterly economic projections.
Gas costs drove inflation in August, rising 10.6 percent over the month and accounting for more than half of the increase over July. All other major energy categories rose as well.
The latest data follows other recent reports that suggest the economy and the job market may be slowing enough to cool inflation pressures.
Rising trade barriers, aging populations and broad transition to renewable energy are trends that could make it harder for the Federal Reserve and other central banks to meet their inflation targets.
Rates have risen for the pst four weeks, grim news for would-be homebuyers already challenged by a housing market that remains competitive due to a dearth of homes for sale.
Most Federal Reserve officials last month still regarded high inflation as an ongoing problem that could require further interest rate increases, according to the minutes of their July 25-26 meeting released Wednesday.
Inflation in the United States edged up in July after 12 straight months of declines. But excluding volatile food and energy costs, so-called core inflation matched the smallest monthly rise in nearly two years.
Thursday’s inflation data will be among the key metrics the Federal Reserve will consider in deciding whether to continue raising interest rates.
In raising the benchmark short-term interest rate to its highest level since 2001, the Fed provided little guidance about when—or whether—it might hike rates again.
The Federal Reserve’s increase would be its 11th hike in 17 months. As with its previous rate hikes, this one would likely further elevate the costs of mortgages, auto loans, credit cards and business borrowing.
A study by the New York Federal Reserve has found that 14% of applicants for auto loans were rejected over the past year—the highest such proportion since the New York Fed began tracking the figure in 2013.