by Bart H. Meijer and Toby Sterling
AMSTERDAM (Reuters) – U.S. Federal Reserve (Fed) Chairman Jerome Powell said on Tuesday he expects inflation to continue to moderate throughout 2024, as it did last year , even if its confidence in the matter has diminished, against a backdrop of resurgence in prices during the first quarter.
“I expect inflation to come back down…on a monthly basis to levels closer to the lowest figures of last year,” he said at a banking event in Amsterdam.
“I would say my confidence in that is not as high as it was,” he added.
Jerome Powell nevertheless said he considered it unlikely that the Fed would raise interest rates again, repeating that the institution would be “patient” and allow the current key rates to deploy their full impact – comments echoing those which he made on May 1 following the Fed’s monetary policy meeting.
“I don’t think it’s likely, based on the data we have, that the next action we take is to raise rates,” he said. “It is more likely that we will keep policy rates where they are.”
Concerning the evolution of producer prices (PPI), the monthly figures of which were published Tuesday by the American Department of Labor, Jerome Powell judged them to be “mixed”.
Producer prices in the United States increased in April by 2.2% year-on-year, an increase in line with the Reuters consensus, after an increase of 1.8% the previous month.
But on a monthly basis, the PPI showed a stronger-than-expected acceleration last month, of 0.5%, after a contraction of 0.1% in March.
Producer prices were more “mixed” than “overheated”, because previous data were revised downwards even if the April figures were higher than expected, explained Jerome Powell. “I wouldn’t say it’s overheating, I would say it’s mixed,” he said.
Asked whether recent statistics showing higher-than-expected inflation could mean that the Fed’s key rates are not restrictive enough to bring inflation back to the 2% target, Jerome Powell responded that “the time will say.”
Again ruling out the possibility of a further rate hike, the head of the US central bank said it was more likely that rates would remain at their current levels, in a range of 5.25%-5.50 %, for a longer period than expected.
(Toby Sterling and Bart H. Meijer; written by Howard Schneider and Dan Burns; Claude Chendjou, edited by Zhifan Liu and Kate Entringer)
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