London Daily

Focus on the big picture.
Monday, Sep 22, 2025

Fed Chair Powell says inflation is starting to ease, but interest rates still likely to rise

Fed Chair Powell says inflation is starting to ease, but interest rates still likely to rise

Fed Chairman Jerome Powell spoke Wednesday in a question-and-answer session at the Economic Club of Washington, D.C.
Federal Reserve Chairman Jerome Powell said Tuesday that inflation is beginning to ease, though he expects it to be a long process and cautioned that interest rates could rise more than markets anticipate if the economic data doesn’t cooperate.

“The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy,” the central bank chief said during an event in Washington, D.C. “But it has a long way to go. These are the very early stages.”

Powell spoke in a question-and-answer session at the Economic Club of Washington, D.C., with Carlyle Group co-founder David Rubenstein. Powell is a former partner at the firm.

Markets briefly turned positive as Powell spoke as investors are hoping the Fed soon will halt the aggressive interest rate hikes it began last year. However, the major averages later flipped back negative after Powell cautioned about strong economic data like last week’s jobs report for January, before turning positive again.

Asked whether it would have influenced the Fed’s rate call if it had the jobs report before the policy meeting, Powell said, “We don’t get to play it that way unfortunately.” The report showed that nonfarm payrolls rose by 517,000 in January, nearly triple the Wall Street estimate.

He said if the data shows that inflation is running hotter than the Fed expects, that will mean higher rates.

“The reality is we’re going to react to the data,” Powell said. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in.”

At its most recent meeting, which concluded six days ago, the Fed raised its benchmark interest rate a quarter percentage point, the eighth increase since March 2022, to a target range of 4.5%-4.75%.

In his remarks Tuesday, he gave no indication of when the hikes will stop, and said it probably will take into 2024 before inflation gets to a point where the Fed feels comfortable. The central bank targets 2% inflation, and it’s currently running well in excess of that by multiple measures.

“We expect 2023 to be a year of significant declines in inflation. It’s actually our job to make sure that that’s the case,” he said. “My guess is it will take certainly into not just this year, but next year to get down close to 2%.”

The Fed looks at a series of data points when examining inflation.

One particular point of interest is the personal consumption expenditures price index that the Commerce Department produces. The headline reading showed inflation rose 5% over the past year in December, and 4.4% when discounting food and energy — “core” inflation that is thought to be a better gauge of long-run trends.

But the Fed has gotten even more granular than that, lately focusing on core services inflation minus housing, which Powell said remains elevated.

“We need to be patient,” he said. “We think we’re going to need to keep rates at a restrictive level for a period of time before that comes down.”

Powell’s first mention of “disinflationary” trends was in his post-meeting news conference last Wednesday. Markets latched onto the term and briefly rallied before turning volatile over the last several sessions.

Powell said he expects inflation will cool but at a gradual pace.

“Our message [at the last meeting] was this process is likely to take quite a bit of time. It’s not going to be smooth,” he said. “It’s probably going to be bumpy, and we think that we’re going to need to do further rate increases, as we said, and we think that we will need to hold policy at a restrictive level for a period of time.”
Newsletter

Related Articles

0:00
0:00
Close
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
Explosive Email Shows Sarah Ferguson Begged Forgiveness from Jeffrey Epstein After Taking His Money
Corrupt UK Politician Ed Davey Demands Elon Musk’s Arrest for Supporting Democracy
UK, Canada, and Australia Officially Recognise Palestine in Historic Shift
Alibaba Debuts Open-Source Deep Research Agent with Benchmarks Rivaling OpenAI
Marcos Faces Legacy-Defining Crisis as Flood Projects Scandal Sparks Massive Tide of Protests
China’s Micro-Drama Boom Turns Stalled Real Estate Projects into Lavish Film Sets
New Eye Drops Show Promise in Replacing Reading Glasses for Presbyopia
'Company Got 5,189 H-1B Visas, Then Laid Off 16,000 Americans': US Defends New $100,000 H-1B Visa Fee
Golf legend tells Omar she should be 'sent back to Somalia' after her Kirk comments
EU Set to Bar Big Tech from New Financial Data Access Scheme
China Bans Livestreaming and AI in Religion Amid Crackdown on Shaolin Temple Scandal
Documents Reveal Mandelson Failed to Declare Epstein-Funded Flights as MP in 2003
Dubai Property Boom Shows Strain as Flippers Get Buyer’s Remorse
Harris Memoir Sparks Backlash from Democrats for Blunt Critiques in ‘107 Days’
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Japan’s ‘Death-Tainted’ Homes Gain Appeal as Prices Soar in Tokyo
Massive Attack Withdraws from Spotify Over Daniel Ek’s €600M Defence-AI Investment
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
Top AI Researchers Are Heading Back to China as U.S. Struggles to Keep Pace
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders Third Lethal Strike on Drug-Trafficking Vessel as U.S. Expands Maritime Counter-Narcotics Operations
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
Why Google Search Is Fading and AI Is Taking Its Place
UAE-US Stargate Project Poised to Make Abu Dhabi a Global AI Powerhouse
Federal Judge Dismisses Trump’s Fifteen-Billion-Dollar Suit Against New York Times, Orders Refile
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
DeepSeek Claims R1 Model Trained for only $294,000, Sparking Global Debate Over China’s AI Capabilities
SoftBank Vision Fund to Cut Nearly Twenty Percent of Staff in Bold AI Strategy Shift
Intel’s Next-Gen Manufacturing Gets a Lifeline from Nvidia’s Strategic $5B Deal
Erika Kirk Elected CEO of Turning Point USA After Husband Charlie Kirk’s Assassination
Massive Strikes in France Pressure Macron and New PM on Austerity Proposals
Trump Seeks Supreme Court Permission to Remove Fed Governor Lisa Cook
Hillary Clinton’s Reckless Rhetoric Fuels Division After Charlie Kirk’s Assassination
NASDAQ Rises to Record as Intel Soars More Than 20%, Nvidia Gains 3%
Nvidia’s $5 Billion Bet on Intel Reshapes AI Hardware Landscape
Trump and Starmer Clash Over UK Recognition of Palestinian State Amid State Visit
Trump’s Quip on Biden and Google Lawsuit Revives Debate Over Antitrust Legacy
Macron and his wife to provide 'scientific photographic evidence' that she is a real woman
US Tech Giants Pledge Billions to UK AI Infrastructure Following Starmer's Call
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
×