U.S. Officials Likely to Act Before Inflation Hits 2%
Fed Chair Jerome Powell recently spoke at the Economic Club of Washington, highlighting the influx of positive inflation data and the unlikely prospect of the economy experiencing a “hard landing.”
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Fed Chair Jerome Powell recently spoke at the Economic Club of Washington, highlighting the influx of positive inflation data and the unlikely prospect of the economy experiencing a “hard landing.”
Powell pointed out that the long-standing high interest rate is expected to continue influencing inflation retroactively. Consequently, officials are considering a rate reduction before the U.S. Consumer Price Index (CPI) reaches the target of 2%.
Currently, the interest rate remains at 5.5%, a figure that has been constant since July 2023. This rate was last seen in 2001. As of the publication of this news, data from the CME FedWatch Tool suggests there is a 91.2% probability that the Federal Reserve will keep the rate unchanged at the upcoming meeting on July 31.
At the start of the year, analysts were more optimistic about a possible decrease in the interest rate. However, by June, a chief economics correspondent for the WSJ noted that many economists and other professional Fed watchers are now anticipating one or two rate cuts in 2024.
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