By Ovunc Kutlu
ISTANBUL (AA) - US Federal Reserve Chair Jerome Powell said Wednesday that inflation is still too high, with ongoing progress to bring it down not assured, and the path forward uncertain.
Powell said the Federal Open Market Committee (FOMC) believes the policy rate is "likely" at its peak in the monetary tightening cycle, and added, in a remark certain to be closely analyzed: "If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year."
The Fed on Wednesday kept its federal funds rate unchanged, as expected, in the 5.25%-5.5% target range – the highest level in nearly a quarter-century.
The committee, however, gave no hints about when it will begin to lower interest rates this year.
"In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," it said in its latest statement.
Powell said in his post-meeting news conference that "reducing policy restraint too late or too little could unduly weaken economic activity and employment."
"The economy has surprised forecasters in many ways since the pandemic. Ongoing progress towards our 2% inflation objective is not assured. Economic outlook is uncertain," he told.
The American economy expanded 3.3% in the fourth quarter, beating market estimates of 2%, but it slowed down from 4.9% GDP growth in the third quarter. Overall, the US economy grew 3.1% over the last year, also above expectations.
Powell stressed that the committee will make its monetary policy decisions on a meeting-by-meeting basis.