Jerome Powell, the president of the Federal Reserve, announced on Monday, July 15, 2024, that the US central bank will begin reducing interest rates without waiting for inflation to hit 2%. He did not specify when the first cut would be made, but economists stipulate that it should be in September.
During an event held at the Economic Club of Washington, Powell highlighted that waiting for inflation to return to this level would imply maintaining a restrictive monetary policy for a “very long” period.
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Powell also mentioned the better performance of the North American economy in recent years. He cited a slowdown in inflation, especially in the 2nd quarter of 2024.
“We didn’t gain additional confidence in the 1st quarter, but the 3 readings from the 2nd quarter, including last week’s, add a little confidence,” he said.
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INFLATION IN THE USA
Annual US inflation was 3% in June. The rate fell 0.3 percentage points compared to the previous month, when it was 3.3% in the 12 months. Monthly inflation was 0.1%.
The consumer price index was announced on Thursday, July 11, 2024, by the BLS (Bureau of Labor Statistics).
According to the statement, core inflation, which does not include food and energy prices, grew by 0.1% in June. It also rose to 3.3% on an annual basis, “the smallest 12-month increase in this index since April 2021.”
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