watch
now
Federal
Reserve
Chair
Jerome
Powell
said
Monday
that
the
central
bank
will
not
wait
until
inflation
hits
2%
to
cut
interest
rates.
Speaking
at
the
Economic
Club
of
Washington
D.C.,
Powell
referenced
the
idea
that
central
bank
policy
works
with
“long
and
variable
lags”
to
explain
why
the
Fed
wouldn’t
wait
for
its
target
to
be
hit.
“The
implication
of
that
is
that
if
you
wait
until
inflation
gets
all
the
way
down
to
2%,
you’ve
probably
waited
too
long,
because
the
tightening
that
you’re
doing,
or
the
level
of
tightness
that
you
have,
is
still
having
effects
which
will
probably
drive
inflation
below
2%,”
Powell
said.
Instead,
the
Fed
is
looking
for
“greater
confidence”
that
inflation
will
return
to
the
2%
level,
Powell
said.
“What
increases
that
confidence
in
that
is
more
good
inflation
data,
and
lately
here
we
have
been
getting
some
of
that,”
he
said.
Powell
also
said
he
thinks
a
“hard
landing”
for
the
U.S.
economy
was
not
“a
likely
scenario.”
Monday
was
Powell’s
first
public
speaking
appearance
since
the
consumer
price
index
report
for
June
showed
cooling
inflation,
with
prices
actually
falling
month
over
month.
Powell
said
at
the
beginning
of
his
appearance
that
he
was
not
intending
to
make
any
signals
about
when
the
Fed
might
start
to
cut
interest
rates.
The
central
bank’s
next
policy
meeting
is
at
the
end
of
July.
Powell
made
the
remarks
as
part
of
a
discussion
with
David
Rubenstein,
chairman
of
the
Economic
Club
of
Washington,
D.C.,
and
co-founder
of
The
Carlyle
Group,
where
the
Fed
chair
previously
worked.
The
target
range
for
the
federal
funds
rate
is
currently
5.25%
to
5.50%.
That
is
up
from
a
range
of
0%
to
0.25%
during
the
Covid-19
pandemic,
and
a
range
of
1.50%-1.75%
before
that
health
crisis.
The
federal
funds
rate
influences,
directly
or
indirectly,
the
cost
of
money
throughout
the
economy,
such
as
mortgage
rates.
“People
I
don’t
know
will
always
say,
‘hey,
cut
rates.’
Somebody
said
that
in
the
elevator
this
morning,”
Powell
said
jokingly.
