Federal Reserve Chair Jerome Powell said the disinflationary process is underway but warned that it is too early to declare victory.
The Fed raised rates by an additional 25 basis points Wednesday, adding that “ongoing increases in the target range will be appropriate” to get inflation down to the 2% goal.
However, markets were more focused on Powell’s “disinflation” comments shared at the press conference.
“It is gratifying to see the disinflationary process now getting underway,” he said. “We can now say, for the first time, that the disinflationary process has started. And we see it really in goods prices so far.”
Powell added that his base case scenario is inflation going back down to 2% without a significant economic decline or a considerable increase in the unemployment rate. Also, he ruled out a rate cut later this year.
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