From CNBC: 2024-05-14 11:14:18

Federal Reserve Chair Jerome Powell stated that inflation is falling more slowly than anticipated, requiring the central bank to remain on hold for an extended period. Despite expectations of a decrease in inflation, Powell emphasized the need for patience and maintaining current policy rates due to higher inflation readings than expected.

Powell, speaking at a meeting in Amsterdam, highlighted the significant deceleration of inflation throughout the year and the need for time to assess the impact of restrictive policies. While expressing hope for inflation to decrease gradually, Powell emphasized the importance of sustaining current policy rates for an extended period.

The Fed has maintained its key borrowing rate at a range of 5.25%-5.5% since July, the highest level in over two decades. Powell indicated that the next move by the Fed is unlikely to be an interest rate hike, reflecting the committee’s decision to hold rates steady due to limited progress in achieving the 2% inflation target.

Following the Federal Open Market Committee meeting, Powell reiterated his stance on maintaining policy rates, emphasizing the need for continued patience in assessing inflationary trends. He noted a lack of significant progress in addressing inflation, despite multiple interest rate adjustments.

Recent data from the Labor Department showed a higher than expected increase in the producer price index in April, driven by a surge in services prices. Powell described the inflation report as mixed, indicating a need for more data to evaluate the persistence of inflationary pressures going forward.

Read more: Powell says inflation has been higher than thought and expects rates to hold steady