2024-03-29 22:16:43
Statement of position after the announcement of the core PCE price index in February
“There is progress, but we must not overreact.”
Jerome Powell, Chairman of the U.S. Federal Reserve System (Fed), stated that the price index announced on the 29th (local time) was in line with expectations. However, he reaffirmed his position that he would not rush to lower interest rates.
According to the Wall Street Journal (WSJ), Chairman Powell said of the core personal consumption expenditures (PCE) price index in February, “It is consistent with what we want to see,” and added, “Officials say we are on track toward the Fed’s inflation target of 2%.” He repeatedly confirmed, “It would not be appropriate to lower interest rates until we are certain.”
On this day, the Ministry of Commerce announced that the core PCE price index excluding food and energy rose 2.8% compared to February of last year.
This is 0.1 percentage points lower than the core PCE price index increase rate (2.9%) compared to the same period last year in January. The core PCE price index in February rose 0.3% compared to the previous month, but was lower compared to the 0.5% increase in January compared to the previous month. It can be seen that the increase in the core PCE price index has slowed slightly.
The Federal Reserve uses the PCE price index instead of the Consumer Price Index (CPI) as the basis for determining whether its monetary policy goals have been achieved.
“Last month’s data is not as low as most of the positive numbers we had in the second half of last year, but it is certainly closer to the levels we would like to see,” Powell said.
“We have been saying throughout last year and this year that we are making progress,” he said. “We have noted that progress, but we will not overreact to it.”
Chairman Powell suggested, “We can and will be very cautious in our decisions (related to interest rates).”
He also noted that “the U.S. economy is strong, and we are seeing very strong growth.”
“The banking system is in a good position right now,” Powell said. “I think the situation is fairly stable.”
Investors currently expect the Federal Reserve to cut interest rates starting in June. Some predict that interest rates may be lowered by 0.25 percentage points three times before the end of this year.
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2024-03-29 22:16:43