The Federal Reserve still hasn’t achieved its goal of raising inflation, Chairman Jerome Powell said Thursday, even though price gains have been right near the central bank’s 2 percent target in recent months.
“We’re not declaring victory there,” Powell said in an interview with the publication Marketplace. “We want inflation to be symmetrically around 2 percent, so just kind of reaching up and touching it once doesn’t fulfill that goal.”
Powell’s comments are another indication that he doesn’t feel pressure to rapidly tighten monetary policy even though unemployment is the lowest it has been in decades and inflation has been rising.
Inflation rose to 2.3 percent in May in the gauge favored by the Fed. For almost all of the past six years, though, inflation has run below the central bank’s target, raising the fear that the Fed may have been keeping money too tight and choking off faster job growth.
In Powell’s formulation, a lack of higher inflation suggests that employment could grow more.
“I think the economy’s in a really good place,” he said, noting the number of people who have entered the labor force in recent months.
He warned, though, that leaving money too loose for too long could raise the risk of a housing or stock-market bubble.
Investors expect the Fed to continue slowly raising interest rates, with two more quarter percentage-point hikes anticipated this year.
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