Federal Reserve Chairman Jerome Powell said he believes high inflation will be with us until 2025, even with record high-interest rates, in a Wednesday press conference.
Powell does not see the inflation rate returning to the normal level of 2% until 2025, far sooner than when he believes the Fed will start lowering rates again, he said in a press conference concluding the July Federal Open Market Committee meeting. The remarks follow the Wednesday announcement prior to the press conference by the Fed that it would raise its benchmark federal funds rate by 25 basis points to a range of 5.25% and 5.50%, reaching the highest level since 2001, according to the Fed press release. (RELATED: Biden Regulator Poised To Shove Left-Wing Priorities Into The Workplace)
“If we see inflation coming down credibly, sustainably, then we don’t need to be at a restrictive level anymore,” Powell said at the press conference. “We can move back to a neutral level and then below a neutral level at a certain point. I think we of course would be very careful about that.”
“We would really want to be sure that inflation is coming down in a sustainable way. I’m not gonna try to make a numerical assessment of when and where that would be, but that’s a way I would think about, is you’d stop raising long before you get to 2% inflation and you’d start cutting before you get two percent inflation too, because we don’t see ourselves getting all the way back to two until 2025 or so,” he said.
The most recent inflation data showed a 3.0% increase year-over-year for the month of June, falling from 4.0% in May, far from the 2% target the Fed sets as its goal. Core CPI, which excludes the volatile categories of energy and food, remains even more elevated at 4.8% year over year for June, falling from 5.3% in May.
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