Emre Yumlu 
FED Chair Powell emphasized in the Senate that the U.S. economy remains strong, while inflation is still high. Speaking before the Senate Finance, Housing, and Urban Affairs Committee, Powell stated that the economy continues to be resilient, though inflation remains above the 2% target.
Inflation and Monetary Policy
Powell stated that inflation has significantly declined over the past two years but noted that personal consumption expenditures (PCE) inflation remains above 2%. Emphasizing that the FED’s 2% inflation target will remain unchanged, he asserted that monetary policies will be shaped based on incoming data.
Labor Market and Economic Strength
Powell highlighted that the labor market has cooled from its overheated phase but remains strong. He reported that the unemployment rate has stabilized at 4% and nominal wage growth has moderated. He also noted that long-standing income disparities among workers have narrowed.
Interest Rate Policy and Future Outlook
Powell stated that the FED is not in a hurry to ease its current monetary policy and that interest rates will be adjusted according to economic conditions. He indicated that if inflation declines faster than expected, rate cuts could be considered, but if economic growth weakens, the FED is prepared to loosen policy accordingly.
FED’s Strategy Review
Powell announced that the FED regularly reviews its monetary policy framework and will hold a research conference in May. He confirmed that the review process, expected to conclude by late summer, will not alter the 2% inflation target.
Overall, Powell reaffirmed the FED’s commitment to its dual mandate of employment and price stability, emphasizing that the economy remains strong and interest rate policies will be adjusted based on economic conditions.
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