In a recent statement, the Federal Reserve (Fed), led by Jerome Powell, announced that it will not be cutting interest rates until inflation slows down to 2%. Powell assured the public that there will be no increase in the Fed’s policy rate in future meetings and that a rate hike is unlikely to be the next move.
According to Powell, developing the necessary confidence in inflation slowing down to the 2% target will take longer than expected. In March, consumer prices in the United States rose by 3.5% year-on-year, surpassing the desired 2% level.
At its recent meeting, the Fed decided to maintain its key interest rate in the range of 5.25–5.50%, citing a lack of progress towards the inflation target as the reason for the decision. The central bank remains cautious about the economic outlook and inflation risks, emphasizing the need to achieve the long-term goal of 2% inflation.
Overall, while some have suggested that lowering interest rates may help stimulate economic growth, Powell believes that stability and growth are best achieved through a gradual approach that prioritizes reaching inflation targets over short-term gains.
