US Federal Reserve Chairman Jerome Powell cautioned Congress on Tuesday about potential threats posed by keeping interest rates high for extended periods. "Higher-than-desired inflation isn't the sole concern," he emphasized during a congressional hearing, indicating that while curbing inflation remains essential, timing reductions in policy measures is now under scrutiny.
Powell conveyed to the US Senate committee responsible for banking and financial matters that prematurely easing or excessive relaxation could hinder inflation trends. "Similarly," he continued, "if action is not taken soon enough, it may negatively affect economic growth and job opportunities."
The central bank previously escalated interest rates to the highest level in nearly two decades as a measure against surging prices but has since observed a decrease from peak levels. Nonetheless, inflation persists above the Fed's 2% objective amidst ongoing cost-of-living challenges nationwide.
Within weeks for their upcoming rate determination meeting at month's end, majority of policymakers have indicated intentions to lower rates once or twice this year based on the central bank's economic projections. Powell expressed hopefulness regarding inflation, citing recent data suggesting a positive trend toward achieving the targeted 2% goal as more favorable information emerges.
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