Fed Chair Powell while talking about inflation said that while the central bank's projection is that inflation will ease this year, the progress isn't as quick as they would like. The comment comes after the Federal Reserve officials revised the core inflation outlook upward to 2.7%, compared to 2.5% forecast in December.
“The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation,” he said. “It should come as we start to see in the middle of the year, progress on tariffs... going through once and then tariff inflation coming down.”
Powell, in his speech, said, "Near term inflation expectation are up in the recent weeks."
He further added that energy prices will push up overall inflation and some of the oil shock will show up in core inflation. The series of shock due to the Middle east war have interrupted inflation progress, he pointed.
"Main thing we are looking for is lowering goods inflation," he added.
However, while the Fed's projections forecasted around two more rate cuts this year, he acknowledged that could change if inflation remains stubborn.
“The rate forecast is conditional on the performance of the economy, so if we don't see that progress, then you won't see the rate cut,” he said.
The US Federal Reserve on Wednesday kept its key interest rate unchanged for the second time, in line with expectations. In addition, core inflation rate is expected to be at 2.7% by end of 2026, up from 2.5% forecast in December.
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