Fed Chairman Powell dampens hopes of interest rate cuts

Fed Chairman Powell dampens hopes of interest rate cuts

Federal Reserve Chairman Jerome Powell has dampened expectations of imminent interest rate cuts in view of persistently high inflation in the USA. In a statement in Washington, Powell stressed that current inflation data does not provide greater confidence for a rate adjustment. If inflation remains at a high level, the central bank would maintain its strict monetary policy as long as necessary. The latest figures suggest that it could take longer than expected to turn around interest rates.

In March, inflation data again showed a rise above forecasts, with consumer prices rising 3.5 percent compared to the same period last year. The Federal Reserve aims for an inflation rate of 2 percent. The US economy also appears to have a robust labor market, raising the possibility that the central bank could cut interest rates later than planned.

At its last meeting in March, the Federal Reserve kept interest rates stable and indicated possible cuts later in the year. The current key interest rate is in the range of 5.25 to 5.5 percent, reaching its highest level in more than two decades. Commercial banks can borrow central bank money at this rate. The prospect of an imminent interest rate cut remains muted for the time being, said Powell.