(Washington) Federal Reserve Chairman Jerome Powell showed signs of satisfaction on Tuesday, during a forum of central bankers in Sintra (Portugal), estimating that the institution had made “some progress in bringing inflation back to [sa] target”, which could be reached at the end of 2025.
Published at 12:24 p.m.
“We have made some progress in bringing inflation back toward our target, as the labor market has remained strong and growth has held up. We want to continue in this direction,” said the Fed chief, during an exchange with his counterparts from the European Central Bank (ECB), Christine Largarde, and the Bank of Brazil, Roberto Campos Neto.
“We don’t see inflation returning to 2% this year or even next year, maybe at the end of next year, but rather the year after,” in 2026, he added.
Jerome Powell continues to be cautious about the evolution of inflation in the United States, which, after a rapid decline in the second half of 2023, remained between 2.5% and 3% in the first half of 2024, even rising slightly at the end of the first quarter before falling slightly again.
The main thing is that we have made real progress.
Jerome Powell, Chairman of the US Federal Reserve
In May, the PCE index, which is favored by the Fed, fell back to 2.6% on an annual basis, following the same path as the CPI index, which is used to calculate American pensions, in particular.
While the Fed has kept its rates unchanged for longer than initially anticipated by the markets at the start of the year, the latter are now hoping for a first reduction in the second half of the year, probably at the September meeting, which will be the last before the American presidential elections, scheduled for November 5.
Fed rates hit their highest level since 2001 nearly a year ago, in the 5.25% to 5.50% range.
At its last meeting in mid-June, the Fed warned that it wanted to see several months of falling inflation before rate reductions could be initiated.
