The Federal Reserve's chairman Jerome Powell noted in his prepared remarks to the House Financial Services Committee that inflation has eased substantially over the past year, and this slowing has occurred without a significant increase in unemployment. "As labor market tightness has eased and progress on inflation has continued, the risks to achieving our employment and inflation goals have been moving into better balance," he added.
Powell also said that the policy rate is likely at its peak for this tightening cycle and if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. However, he warned that reducing policy restraint too soon or too much could result in a reversal of progress the Fed has seen in inflation and ultimately require even tighter policy to get inflation back to 2%, while reducing policy restraint too late or too little could unduly weaken economic activity and employment.
The Fed's chief assured that the Fed's policymakers will carefully assess the incoming data, the evolving outlook, and the balance of risks. "The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 per cent," he stressed.
Powell also emphasized that the U.S. central bank will do everything it can to achieve its maximum employment and price stability goals.