West News Wire: According to Fed Chair Jerome Powell, the Federal Reserve is still “very far” from its desired inflation rate, and almost all of its voting members favour at least one more increase in interest rates. Powell spoke to House legislators on Wednesday.
Inflation is still double the Federal Reserve’s goal rate of 2%.
Powell informed the members of the House Financial Services Committee on Wednesday that “we’re very far from our inflation target.” “We’re very committed to returning to 2%.”
According to Powell, high inflation continues to pose a threat to Americans, particularly low-income individuals.
Price increases often hit those at the lower end of the income range more severely than those at the middle or upper end because high inflation can get you in trouble right away if you’re living on a fixed income just to cover the basic necessities,” Powell said.
The Federal Reserve’s benchmark interest rate, last seen in the 1980s, has sharply increased in tandem with the deceleration in price increases since the peak last summer.
However, the Federal Reserve stopped its aggressive sequence of interest rate hikes earlier this month, breaking a 15-month streak of 10 straight rate increases.
The Federal Reserve has attempted to stop price increases at that time by reducing consumer demand and weakening the economy. However, the strategy runs the risk of sending the economy into a recession.
Recent data suggests that the approach to policy has been successful in reducing economic activity while preventing a downturn. Over the three months ending in the U.S. gross domestic product increased at a slow annualized pace of 1.1% annualized rate over the three months ending in March, according to government data.
