Jerome Powell still thinks the Fed’s next move will be to lower interest rates.
The Fed on Wednesday kept its benchmark federal funds target unchanged at a range of 5.25% to 5.50%, but acknowledged that inflation progress has stalled in recent months.
The Fed chairman doesn’t think a flare-up in inflation will prompt interest rate hikes.
“I think it’s unlikely that the next rate decision will be a rate hike,” Powell said at a press conference Wednesday after two days of Fed meetings. “What do we need? We need convincing evidence that our policies are not restrictive enough, and that’s not what we’re seeing.”
Although not ready to seriously consider raising rates at this point, the Fed has changed its stance on the timing of rate cuts. The recent strength in inflation means that rate cuts are further away than seemed earlier this year.
“It’s likely that it will take longer than previously anticipated to gain this much confidence,” Powell said.
Powell added that he doesn’t have much confidence in his prediction that inflation will fall enough for the Fed to cut interest rates this year.
