Federal Reserve Chairman Jay Powell on Monday stressed that he wants to stay on as chairman until the end of his term in May 2026, but also sent another signal that the central bank is nearing the time when it could start cutting interest rates.
Powell cited a recent reversal in inflation measures following better-than-expected first-quarter data, including strong June consumer price index readings released last Thursday.
“While the first quarter did not provide any further confidence, the three second-quarter numbers, including last week’s, give us some more confidence that inflation is heading toward our 2 percent goal,” Powell said in an interview at the Washington Economic Club.
The “core” consumer price index, which excludes volatile food and energy prices over which the Fed has no control, rose 3.3% year-on-year in June, down from 3.4% in May and 3.6% in April.
On July 26, the Federal Reserve will release the latest June data on its preferred inflation measure, the “core” personal consumption expenditures index.
“What would boost confidence would be better and more positive inflation data, and we’ve been getting that recently,” Powell added Monday.
Read more: Consumers breathe relief as inflation on everyday living costs continues to subside
Federal Reserve Chairman Jerome Powell. (AP Photo/Susan Walsh, File) (AP)
The inflation comments followed guidance Powell gave to Congress last week, when he told lawmakers that the inflation numbers “show some further modest progress” and that “further, better data will strengthen our confidence that inflation is on a sustained path to 2 percent.”
Powell also reiterated to lawmakers on Monday that the Fed is focusing on both its price stability and maximum employment mandates amid a weakening labor market.
It’s another sign to Fed watchers that policymakers are close to cutting rates, with Powell stressing on Monday that the central bank would act if it saw any unexpected weakness in the job market.
Market participants are currently expecting an interest rate cut at the Fed’s meeting on September 17-18, less than seven weeks before the election.
The Fed is also scheduled to meet later this month, and some market participants believe a rate cut is possible at that meeting if other conditions are met by then.
Powell reiterated the position she took to Congress on Monday, but did not specify a timeline.
“I’m not going to send a signal about any particular meeting,” he said. “We will make these decisions on a meeting-by-meeting basis and taking into account the evolving data and balancing of risks.”
The story continues
Read more: How the Federal Reserve’s interest rate decision will affect your bank accounts, CDs, loans and credit cards
Mr. Powell will face intense political scrutiny in the coming months, with lawmakers signaling last week they plan to criticize the central bank if key decisions in September don’t go their way.
If Powell and his colleagues choose to keep rates at their 23-year highest level, it could bring to a head the calls from Democratic critics for lower rates.
But if policymakers do enact the cuts, Republicans in Congress led by President Donald Trump will likely denounce the move as bowing to election-year pressure.
Asked Monday whether she planned to stay on in office until the end of her term in 2026, Powell gave a one-word response: “Yes.”
Asked whether he would stay on for longer if reappointed, he replied, “I can’t say anything about that today.”
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