Welcome to Extreme Investor Network, where we provide you with valuable insights and unique information on the economy that you won’t find anywhere else. Today, we’re diving into Federal Reserve Chair Jerome Powell’s recent statements on interest rates and inflation.
In a speech at the Economic Club of Washington D.C., Powell made it clear that the Fed will not wait for inflation to hit 2% before considering cutting interest rates. He emphasized the importance of not waiting too long, as the effects of tightening monetary policy can drive inflation below the target level.
Powell highlighted the need for “greater confidence” that inflation will return to 2%, noting that recent good inflation data has increased that confidence. He also expressed optimism about the U.S. economy, stating that a “hard landing” is not likely.
With the Fed’s next policy meeting approaching in July, Powell refrained from signaling when interest rates might be cut. The current target range for the federal funds rate is 5.25% to 5.50%, a significant increase from the range during the Covid-19 pandemic.
It’s important to note that the federal funds rate impacts the cost of money throughout the economy, including mortgage rates. Powell highlighted the humor in the public’s eagerness for rate cuts, jokingly mentioning a stranger in an elevator suggesting a rate cut.
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