Powell: Fed to Hold Rates, Await Inflation Decline

Federal Reserve Chairman Jerome Powell testified before Congress on Tuesday, stating that the central bank will maintain current interest rates and wait for more evidence of a decline in inflation before adjusting monetary policy. Powell emphasized that while long-term interest rates have risen, this is not related to inflation and that the Fed will remain cautious until more definitive information is available.

Powell also noted that productivity growth has been strong over the past five years, and if this trend continues, a sustainable GDP growth rate of 2% is achievable. However, he acknowledged that there has not been much progress in core inflation over the past year, and the latest inflation data still needs to be carefully monitored.

The Fed's cautious approach comes as the central bank continues to grapple with the challenge of bringing inflation under control. Despite recent signs of a slowdown in price increases, core inflation has remained stubbornly high, and the Fed has been reluctant to ease monetary policy too quickly for fear of reigniting inflation.

Powell's testimony comes as the Fed continues to monitor the economic recovery and assess the impact of its monetary policy on inflation and growth. The central bank has been gradually raising interest rates in an effort to bring inflation under control, but the pace of rate hikes has been slower than initially expected.

The Fed's cautious approach to monetary policy has been welcomed by some economists, who argue that the central bank should avoid making drastic changes to interest rates that could harm the economic recovery. However, others have criticized the Fed for being too slow to act on inflation and have called for more aggressive action to bring prices under control.

As the Fed continues to monitor the economic recovery and assess the impact of its monetary policy on inflation and growth, investors and economists will be closely watching for any signs of a change in the central bank's approach to monetary policy. With inflation remaining a concern, the Fed will need to balance the need to bring prices under control with the risk of harming the economic recovery.