by Howard Schneider
WASHINGTON (Reuters) – U.S. Federal Reserve Chairman Jerome Powell said on Wednesday he was not yet ready to declare the fight against inflation over.
“Our job is to make decisions when and how they need to be made, based on the data, the changing outlook and the balance of risks, not on other factors, including political factors,” Jerome Powell said during a hearing before the House Financial Affairs Committee.
“We have a long tradition of doing this, including in election years. Our decisions will be well-founded. It is simply not appropriate for us to think in election cycles.”
Jerome Powell and other Fed officials have indicated they are not considering further interest rate cuts until they see more progress toward the central bank’s 2% inflation target.
The Fed chairman said the US economy was heading for a soft landing, which would see the Fed’s inflation target met without a rise in the unemployment rate.
“A path exists to return to price stability while keeping unemployment low,” Powell said. “We are moving forward on that path, and we are determined to stay on it.”
The latest PCE inflation figure, the U.S. central bank’s favorite gauge, rose 2.6% year-on-year in May, indicating that price momentum continues to slow.
Jerome Powell has again said the Fed should cut interest rates again before inflation hits 2%, but after underlying dynamics seem likely to lead to it.
The Fed chairman told the Senate Banking Committee on Tuesday that the U.S. economy was no longer overheating.
The next meeting of the US Federal Reserve will take place on July 30-31.
Members of the House Financial Affairs Committee also questioned Powell about his interactions with U.S. President Joe Biden, including Biden’s cognitive abilities.
“In your interactions with the president, have you noted any decline in his mental or cognitive abilities?” asked Republican Rep. Mike Lawler.
“No,” Jerome Powell replied.
The Fed chairman said his last meeting with Joe Biden was “a few months ago” and that he only shook his hand.
( Camille Raynaud)
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