The Federal Reserve System (FRS) has reiterated that interest rates should remain elevated for an extended period to keep inflation under control. This stance was communicated by US Federal Reserve Chair Jerome Powell during remarks at a Foreign Bankers Association event in Amsterdam, according to Bloomberg.
Powell acknowledged that the recent data were not as favorable as hoped. He noted that inflation in the first quarter surprised on the upside, underscoring why patience and sustained, tough policy measures are necessary to bring inflation back toward the 2 percent target.
While describing current monetary policy as restrictive in many respects, Powell emphasized that the ultimate test is whether policy will enough to slow price growth without triggering unintended economic damage. He also indicated that there would be no rate hikes at the upcoming meeting, signaling a cautious approach while the economy adjusts.
Powell stated that maintaining the current policy stance for a longer period may be required to see a durable reduction in inflation.
In discussing the April data, Powell called it mixed. The Bloomberg report noted that the consumer price index for April was set for release, with economists included in Bloomberg’s survey expecting roughly 3.4 percent annualized CPI growth.
As of early May, the effective policy range was reported around 5.25 to 5.5 percent, reflecting the Fed’s ongoing commitment to fighting inflation.
The discourse around the Fed has included moments of public critique, including earlier comments from Elon Musk voicing skepticism about the central bank’s approach.
For audiences across Canada and the United States, the Fed’s path remains a focal point for financial planning, given how monetary policy influences borrowing costs, consumer prices, and the broader economic outlook in North America. As policy signals evolve, households and businesses alike watch for potential shifts in interest rates, inflation indicators, and growth projections that could inform spending, investment, and savings decisions. [Bloomberg]