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‘Disappointing’ inflation data, tight policy needs more time
AMELIA ISLAND, Fla. (Reuters) – U.S. inflation data through the first few months of 2024 was “disappointing,” Fed Supervisory Vice Chairman Michael Barr said on Monday, leaving the central bank without the evidence. needed to ease monetary policy.
“Inflation readings in the first quarter of this year were disappointing. These results did not give me the confidence boost I had hoped to find in supporting monetary policy easing,” Barr said in remarks prepared to be delivered at a Federal Reserve conference in Atlanta on financial markets.
Federal Reserve Vice Chairman of Supervision Michael Barr. (Reuters)
His prepared speech also addressed the financial regulatory issues he oversees.
“We will need to give our restrictive policy some more time to do its work,” Barr said, reinforcing the Fed’s overarching message that rate cuts, highly anticipated by markets, are on hold until it is clear that inflation will return to 2 % of Fed target.
The Fed’s preferred measure of inflation, the Personal Consumption Expenditures price index, was 2.7% in March and has changed little in recent months after falling steadily over the past year. April data will be released next week.
Barr said he considers the economy to still be “strong… We have solid growth and low unemployment.”
But he said he was aware of the risks to both the Fed’s inflation target and its mandate to keep unemployment as low as possible.
Barr said the current benchmark interest rate, held between 5.25% and 5.5% since July, was adequate for the Fed to “remain stable and watch as conditions evolve.”
The next US central bank meeting will be June 11-12.
(Reporting by Howard Schneider, editing by Nick Zieminski)