The American economy is going through troubled times. It is being eroded by stubborn inflation. Nevertheless, the Federal Reserve is striving to achieve its annual 2% inflation target and continues to fight against soaring prices. However, the crusade against inflation is lasting longer than expected. According to Federal Reserve Chairman Jerome Powell, the regulator will need more time before it embarks on a cycle of rate cuts.
Analyzing the protracted fight against inflation, the Fed Chair called on market participants to be patient while waiting for new evidence that high interest rates in the US are curbing consumer inflation.
Fed policymakers reckon they need more time than anticipated to make sure that the time is appropriate for cutting interest rates. This message was stated by Jerome Powell who also lamented slow progress in the struggle against inflation.
According to the Fed Chairman, the regulator needs "to let restrictive policy do its job." At the same time, the Federal Reserve leader emphasized that he is ready to maintain the current hawkish monetary policy "as long as necessary." Importantly, at the meeting on May 1, 2024, the Federal Reserve decided to keep the federal funds rate at 5.25%–5.5% per annum, where it has been since July 2023.
In March 2024, Jerome Powell allowed for the possibility of lowering the key interest rate "at any point in the current year." Previously, the chairman suggested that seasonal factors triggered the acceleration of consumer inflation earlier this year.
