The Blubber

Fed's Powell: we know the fiscal path we’re on is ultimately unsustainable.

Federal Reserve Chairman Jerome Powell acknowledged that there have been recent signs of inflation cooling, but he emphasized that the central bank remains firmly committed to its 2% mandate. Speaking at the Economic Club of New York in a speech that was widely anticipated, Powell refrained from committing to a specific policy path but did not suggest an inclination to raise interest rates.

While Powell addressed the audience, futures market traders eliminated any possibility of a rate hike in November and reduced the likelihood of such a move even in December. He recognized the progress made in containing inflation but stressed the importance of vigilance in achieving the central bank's objectives.

Powell stated, "Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal." He emphasized that the duration of these lower readings and where inflation will stabilize in the coming quarters remain uncertain.

He reassured, "While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent."

Addressing concerns about interest rates, Powell mentioned that he does not believe rates are currently too high. He stated, "Does it feel like policy is too tight right now? I would have to say no." However, he acknowledged that "higher interest rates are difficult for everybody."

Powell also acknowledged the progress made toward the Federal Reserve's dual goals.