Federal Reserve Chair Jerome Powell recently addressed the latest U.S. inflation data, emphasizing a "cautious but steady" approach to the central bank's interest rate policy, following the release of the personal consumption expenditures (PCE) price index data. During a "Marketplace" interview at the San Francisco Fed, Powell stated, "My first thought on PCE was it came in line with expectations."

The PCE price index rose to a 2.5% annual rate in February, slightly up from the previous month's 2.4% rate. Core inflation, which excludes food and energy, increased by 0.3% month-to-month, slightly more than Powell's expectation of "well below" 0.3%. Despite this, Powell noted, "February reading is definitely more along the lines of what we want to see."

Powell acknowledged the complexity of the situation, stating, "Reducing rates too soon would be very disruptive," and cautioned that "Waiting too long could mean unneeded damage to the economy and the labor market."

Despite the uptick, Powell claims that February's data aligns with the Fed's outlook. He has been cautiously optimistic in recent public engagements, indicating the central bank's readiness to reduce rates, while not committing to a specific timeline: "The economy is strong, no hurry to cut rates. Make the right decisions is more important, we can handle whatever case."

The Federal Reserve has kept its benchmark overnight interest rate steady, projecting a modest decrease by year's end. However, Powell shows reluctance to commit to the current strategy: "We want to be more confident before we cut rates."

While the latest inflation data slightly exceeded expectations, Powell's comments indicate the Fed's seemingly unchanged path, despite his hesitant comments, for interest rate cuts.

Originally reported by Reuters