Powell: Inflation is not the only risk

Fed Chair Jerome Powell said inflation is not the only risk they face in his mid-year presentation to the US Senate Banking Committee. The text of Fed Chair Jerome Powell’s mid-year presentation to the US Senate Banking Committee has been published. Powell said more good data would increase confidence that inflation is on target and that recent data pointed to “modest progress.” Stating that inflation is not the only risk they face, Powell warned that cutting interest rates too little or too late would pose a risk to the economy and the labor market, while cutting too much or too early could halt or reverse the progress in inflation. Powell noted that the labor market was strong but not overheating, and said the central bank’s restrictive stance was trying to better balance supply and demand. Core PCE, the inflation measure that the Fed also tracks, increased by 2.6 percent annually in May. The data climbed to 7.1 percent in June 2022. The unemployment rate in the country increased by 0.1 points to 4.1 percent in June, reaching its highest level since November 2021. Powell's speech strengthened the expectation that the Fed will keep interest rates unchanged at this month's meeting.