Powell: "February Inflation Close to Desired Level... No Rush to Cut Interest Rates"

Jerome Powell, Chair of the U.S. Federal Reserve (Fed), said on the 29th (local time) that the inflation data released "largely aligns with our expectations."

Chair Powell made this remark during a discussion hosted by the Federal Reserve Bank of San Francisco when asked to evaluate the February core Personal Consumption Expenditures (PCE) price index.

On the same day, the Department of Commerce announced that the core PCE price index, which excludes food and energy, rose 2.8% compared to February of last year. This is 0.1 percentage points lower than the year-over-year core PCE price index increase of 2.9% in January. The PCE price index measures the prices paid by U.S. residents when purchasing goods and services.

Chair Powell said, "It is lower than January, but not as low as most of the positive figures we saw in the second half of last year," adding, "However, it is certainly closer to the level we want to see." He reaffirmed the Fed's stance that in order to cut interest rates, there must be confidence that inflation is continuously declining toward the 2% target, and to gain such confidence, "more positive inflation data like what we saw last year is needed." He also emphasized that the decision to start cutting rates is a very important one and that the Fed will not "overreact to inflation data from any particular month."

He described the U.S. economy as solid, explaining, "This means we do not need to rush rate cuts and can wait until we are more confident that inflation is sustainably declining to 2%."