Federal Reserve Chairman Powell: The risks of achieving employment and inflation goals are getting better balanced

Federal Reserve Chairman Powell stated that as the tense supply-demand relationship in the labor market is alleviated, the risks of achieving employment and inflation goals are being better balanced. Inflation has significantly eased over the past year, but it is still higher than the Fed's long-term target of 2%, and long-term inflation expectations remain unstable.

 

If appropriate, the Federal Reserve will maintain the federal funds rate target range at its current level for a longer period. Powell said that The Federal Open Market Committee believes that it would be "inappropriate" to lower the target range before having confidence in sustained inflation falling towards 2%. However, currently, The Fed has not yet gained confidence from various data to start cutting interest rates.

 

Powell also mentioned that slowing down balance sheet reduction was discussed at this meeting and it would be appropriate to slow down soon. Slowing down balance sheet reduction will ensure a smooth transition, alleviate pressure on money markets and limit risks of money market volatility.