Fed Chairman: 'Inflation is still too high'

US Federal Reserve Chairman Jerome Powell said inflation has cooled, but the agency is still determined to return to its 2% target.

In a speech on October 19 in New York, Jerome Powell acknowledged that tightening policies have brought inflation under control, but stressed that the Fed still needs to be cautious in pursuing its target.

"Inflation is still too high. A few months of good data is just the beginning to give us confidence that inflation is moving toward our target. But we don't know how long these good data will last, or where inflation will be in the coming quarters," he said. He affirmed that Fed officials are "unanimously committed to getting inflation to 2%."

The speech raises questions about the Fed’s future policy after a series of consecutive rate hikes. The Fed has raised interest rates 11 times since March 2022, to the current 5.25%, a 22-year high.

Fed Chairman Jerome Powell in his speech on October 19. Photo: Reuters — Fed Chairman Jerome Powell in his speech on October 19. Photo: *Reuters*

Still, Powell said current interest rates are not too high. "Are policies too tight? I don't think so." Still, he acknowledged that "rising interest rates are making things difficult for people."

The Fed also stressed that its goals have been performing well recently. Inflation was 3.7% in September, down sharply from more than 9% in the middle of last year. "Recent data show progress on both our goals of maximum employment and price stability. The economy is doing quite well," he said.

However, the comments came on the same day as a report showed the number of people filing for unemployment benefits last week fell to its lowest level since the start of the year, suggesting a tightening labor market that could put upward pressure on inflation.

Several Fed officials have said in recent days that the central bank may pause its rate hikes. Even the most pro-tightening members think the Fed will wait for the effects of previous rate hikes to build on the economy. The market now expects the Fed to pause, at least for now.

The question now is when they will start cutting rates. "Given the risks and uncertainties, we will be more cautious. The Fed will make decisions based on the incoming data, as well as the outlook and risks," Powell said.

Ha Thu (according to CNN)

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