Federal Reserve Chair Jerome Powell announced that the U.S. Federal Reserve will maintain unchanged interest rates, expressing satisfaction with the progress on inflation but emphasizing the need for more evidence before considering cutting interest rates. Powell spoke at a central banking forum in Portugal, alongside European Central Bank President Christine Lagarde and Brazil central bank Governor Roberto Campos Neto. He highlighted the importance of being more confident that inflation is moving sustainably down toward 2% before considering reducing or loosening policy. The Commerce Department's personal consumption expenditures price index, the Fed's main inflation gauge, rose at a 2.6% 12-month level in May, showing signs of easing but still above the Fed's 2% goal. Powell also mentioned the need for more data before cutting interest rates to ensure that recent weaker inflation readings give a true picture of underlying price pressures. The U.S. central bank has kept its benchmark policy interest rate steady since last July, but officials are debating when to ease monetary policy as inflation edges back to the central bank’s 2% target. The most recent data on inflation and overall economic activity suggest that price pressures may be easing further, and investors anticipate an initial quarter-percentage-point rate reduction at the Fed’s upcoming meeting. Powell emphasized the importance of upcoming employment and inflation reports in determining the timing of any rate reduction. Inflation in the United States is slowing after higher readings earlier this year, according to Powell, who stated that the data for April and May suggest a disinflationary path. However, he stressed the need for further evidence before the Fed would consider cutting interest rates. The Federal Reserve emphasized that inflation has remained stubbornly high in recent months and said it doesn’t plan to cut interest rates until it has "greater confidence" that price increases are slowing sustainably to its 2% target. The Commerce Department's report showed that consumer prices were flat from April to May, with prices rising 2.6% from a year earlier, slightly less than in April. Powell's remarks at the news conference highlighted the disinflationary trend in the U.S. economy, emphasizing the need for caution and more evidence before considering any rate reduction.
