Fed Chair Balances Inflation Fight with Economic Growth in Congressional Testimony

Federal Reserve Chair Jerome Powell’s recent testimony to Congress signals a potential shift in the Fed’s approach to monetary policy. While acknowledging progress in combating inflation, Powell highlighted the cooling job market and the risks of maintaining high interest rates for too long. This balanced perspective suggests the Fed is moving closer to considering rate cuts, possibly as early as this year. Powell emphasized that while inflation remains above the 2% target, it has eased notably over the past two years. The Fed now faces the challenge of balancing its inflation fight with concerns about potentially weakening economic activity and employment, indicating a more nuanced approach to future rate decisions.