A prudent monetary policy promotes price stability in the country, which is why the US Federal Reserve places great weight on fresh inflation data when making interest rate decisions. According to Fed Chairman Jerome Powell, recent figures show that inflation is "resuming its disinflationary trend." Yet, the regulator needs more evidence of cooling inflation before reducing rates, he reiterated.
Powell did not specify the timing for the first rate cut but acknowledged that the Fed had "made quite a bit of progress" in putting inflation back on a downward path. "Because the US economy is strong and the labor market is strong, we have the ability to take our time and get this right," the head of the US central bank added.
The Fed Chair highlighted the importance of maintaining the delicate balance between curbing inflation and preventing a significant deterioration in the labor market.
According to experts, the latest macroeconomic data from the United States looks promising and could lead to further progress in achieving the 2% inflation target. The core inflation rate, the Fed's preferred inflation gauge, rose by only 0.1% in May, marking the smallest increase in six months.
However, some Fed officials remain concerned about labor market conditions in the country. In particular, the hiring rate in the United States has fallen significantly, while the unemployment rate has risen, although it is still relatively low at 4%.
