Jerome
Powell,
chairman
of
the
US
Federal
Reserve,
during
a
Senate
Banking,
Housing,
and
Urban
Affairs
Committee
hearing
in
Washington,
DC,
US,
on
Tuesday,
July
9,
2024.
Tierney
L.
Cross
|
Bloomberg
|
Getty
Images
Federal
Reserve
Chair
Jerome
Powell
on
Tuesday
expressed
concern
that
holding
interest
rates
too
high
for
too
long
could
jeopardize
economic
growth.
Setting
the
stage
for
a
two-day
appearance
on
Capitol
Hill
this
week,
the
central
bank
leader
said
the
economy
remains
strong
as
does
the
labor
market,
despite
some
recent
cooling.
Powell
cited
some
easing
in
inflation,
which
he
said
policymakers
stay
resolute
in
bringing
down
to
their
2%
goal.
“At
the
same
time,
in
light
of
the
progress
made
both
in
lowering
inflation
and
in
cooling
the
labor
market
over
the
past
two
years,
elevated
inflation
is
not
the
only
risk
we
face,”
he
said
in
prepared
remarks.
“Reducing
policy
restraint
too
late
or
too
little
could
unduly
weaken
economic
activity
and
employment.”
The
commentary
coincides
with
the
approaching
one-year
anniversary
of
the
last
time
the
Federal
Open
Market
Committee
raised
benchmark
interest
rates.
The
Fed’s
overnight
borrowing
rate
currently
sits
in
a
rage
of
5.25%-5.50%,
the
highest
level
in
some
23
years
and
the
product
of
11
consecutive
hikes
after
inflation
hit
its
highest
level
since
the
early
1980s.
Markets
expect
the
Fed
to
begin
cutting
rates
in
September
and
likely
following
up
with
another
quarter
percentage
point
reduction
by
the
end
of
the
year.
FOMC
members
at
their
June
meeting,
however,
indicated
just
one
cut.
‘Strengthen
our
confidence’
In
recent
days,
Powell
and
his
colleagues
have
indicated
that
inflation
data
has
been
somewhat
encouraging
after
a
surprise
jump
to
start
the
year.
Inflation
as
judged
by
the
Fed’s
preferred
personal
consumption
expenditures
price
index
was
at
2.6%
in
May
after
peaking
above
7%
in
June
2022.
“After
a
lack
of
progress
toward
our
2
percent
inflation
objective
in
the
early
part
of
this
year,
the
most
recent
monthly
readings
have
shown
modest
further
progress,”
Powell
said.
“More
good
data
would
strengthen
our
confidence
that
inflation
is
moving
sustainably
toward
2
percent.”
The
statement
is
part
of
congressionally
mandated
semiannual
updates
on
monetary
policy.
After
delivering
the
remarks,
Powell
will
face
questioning
from
Senate
Banking
Committee
members
on
Tuesday,
then
the
House
Financial
Services
Committee
on
Wednesday.
In
past
appearances,
Powell
has
veered
away
from
making
dramatic
policy
announcements
while
having
to
dodge
politically
loaded
questions
from
committee
members.
The
questioning
could
get
contentious
this
year
as
Washington
is
on
edge
amid
a
volatile
presidential
campaign.
Several
Democratic
committee
members
urged
Powell
to
lower
rates
soon.
“I’m
concerned
that
if
the
Fed
waits
too
long
to
lower
rates,
the
Fed
could
undo
the
undo
the
progress
we’ve
made
on
creating
good
paying
jobs,”
Sen.
Sherrod
Brown
(D-Ohio),
the
committee
chair,
told
Powell.
“If
unemployment
trends
upward,
you
must
act
immediately
to
protect
Americans
jobs.
Workers
have
too
much
to
lose
if
the
Fed
overshoots
[its]
inflation
target
and
causes
a
completely
unnecessary
recession.”
However,
Powell
has
stressed
that
the
Fed
is
not
political
and
does
not
get
involved
in
taking
policy
sides
outside
of
its
own
roles.
In
his
prepared
remarks,
he
emphasized
the
importance
of
“the
operational
independence
that
is
needed”
for
the
Fed
to
do
its
job.
His
other
remarks
focused
squarely
on
the
stance
of
policy
in
relation
to
the
broader
economy.
Recent
data
has
shown
the
unemployment
rate
creeping
higher
and
broad
growth
as
measured
by
gross
domestic
product
receding.
Both
the
manufacturing
and
services
sectors
reported
being
in
contraction
during
June.
But
Powell
said
the
data
is
showing
that
“the
U.S.
economy
continues
to
expand
at
a
solid
pace”
despite
the
deceleration
in
GDP.
“Private
domestic
demand
remains
robust,
however,
with
slower
but
still-solid
increases
in
consumer
spending,”
he
said.
