The recent rise in US inflation hasn’t stalled the Federal Reserve’s ongoing fight against rising prices, Fed chair Jerome Powell said Friday, shortly after the publication of fresh government data.
Powell spoke shortly after the Commerce Department released data showing the Fed’s favored inflation gauge rose at an annual rate of 2.5 percent in February, up 0.1 percentage points from a month earlier.
But so-called “core” inflation, a closely-watched measure that strips out volatile food and energy costs, eased slightly.
“The report that came out this morning is pretty much in line with our expectations,” Powell told a conference in San Francisco, adding that the US central bank remained on track to hit its long-term inflation target of two percent.
He said that while the recent inflation data were higher than the Fed would have liked, the February figures were “definitely more along the lines of what we want to see.”
“We didn’t overreact to the good data we had the second half of last year,” he said. “And you won’t hear us overreacting to these two months that are higher.”
Powell also addressed the question of where interest rates could settle over the longer term, suggesting they were unlikely to return to the historic lows seen after the 2008 global financial crisis.
“We don’t really know where rates are going to go back to when this whole thing is over,” he said.
“My own expectation is I don’t think rates will go back down to the very, very low levels they were at before the pandemic,” he added.
