USA: Powell (Fed) expects inflation to decline but is less confident than before

USA: Powell (Fed) expects inflation to decline but is less confident than before
USA: Powell (Fed) expects inflation to decline but is less confident than before

AMSTERDAM, May 14 (Reuters) – U.S. Federal Reserve (Fed) Chairman Jerome Powell said on Tuesday he expects inflation to continue to moderate throughout 2024, as has been the case l last year, even if its confidence in the matter declined against a backdrop of a resurgence in prices during the first quarter.

“I expect inflation to come back down…on a monthly basis to levels closer to the lowest figures of last year,” he said at a banking event in Amsterdam.

“I would say my confidence in that is not as high as it was,” he added.

Concerning the evolution of producer prices (PPI), the monthly figures of which were published this Tuesday by the Department of Labor, Jerome Powell judged them to be “mixed”.

Producer prices in the United States increased year-on-year in April by 2.2%, a figure in line with the Reuters consensus, after an increase of 1.8% the previous month. But on a monthly basis, the PPI showed a stronger-than-expected acceleration last month, of 0.5%, after a contraction of 0.1% in March.

Producer prices were more “mixed” than “overheated”, because previous data were revised downwards even if the April figures were higher than expected, explained Jerome Powell.

“I wouldn’t say it’s overheating, I would say it’s mixed,” he said.

Asked whether recent statistics showing higher-than-expected inflation could mean that the Fed’s key rates are not restrictive enough to bring inflation back to the 2% target, Jerome Powell responded that “time will say.”

He added, however, that he did not expect the central bank’s next interest rate decision to be an increase. It is more likely that rates will remain at their current levels, in a range of 5.25%-5.50%, for a longer period than expected, he said. (Toby Sterling and Bart H. Meijer; written by Howard Schneider and Dan Burns; French version Claude Chendjou, edited by Zhifan Liu and Kate Entringer)

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