Powell says US inflation is in line with the Fed, what does it mean?

The most recent inflation data in the United States is “in line with what we would like to see”said on Friday the president of the Federal Reserve, Jerome Powellin comments that appear to keep the central bank’s baseline for interest rate cuts this year intact.

The data of the price index of personal consumption expenditures (PCE) published on friday “They are what we expected”Powell said, and although the numbers showed a smaller slowdown than last year “You won’t see us overreact.”

Last month’s data “wasn’t as low as most of the good readings we got in the second half of last year, but definitely They are more in line with what we want to see“Powell said during an appearance at the San Francisco Fed, where he was interviewed by Kai Ryssdal of public radio’s “Marketplace.”

Powell’s comments were in line with his remarks after the Fed’s policy meeting last week, in which he said higher-than-expected inflation in January and February had not changed the feeling that Price increases would continue to fall this year to the central bank’s 2% target.

Government data showed that the PCE price index rose at an annual rate of 2.5% in February, up from 2.4% the previous month. The figure, which excludes volatile food and energy prices, rose 0.3% monthly, slightly more than Powell anticipated when he said last week that February core inflation would be “well below” 0. 3%.

Still, Powell indicated that the February report did not undermine the Fed’s baseline outlook. Some details of the PCE data, the economists noted, They did show an improvement in aspects of inflation that the Fed considers importanteven though the headline figures have shown little progress in the first two months of the year.

The Fed kept interest rates: when will they start to fall

Last week, The Federal Reserve maintained its overnight reference interest rate in the range of 5.25%-5.50% and also reaffirmed – just barely – a reference projection according to which the rate will drop 0.75 percentage points in the year.

In the last weeks, Powell has had to reconcile expectations that rate cuts will begin this year with data showing that improving inflation figures has slowed down at the beginning of the year.

‘We need to see more’ progress on inflation before cutting rates, he said on Friday.

“The decision to start reducing rates is very, very important… Lhe economy is strong right now, and the job market is strong right now. And inflation has been falling. “We can and will be careful with this decision because we can be.”