Fed doesn’t expect inflation to hit 2% target until 2025, won’t commit to rate cuts

Federal Reserve Chair Jerome Powell said on Tuesday that he didn’t anticipate inflation returning to its 2% target before the end of next year at the earliest — and would not commit to cutting interest rates this year.

Speaking at an economic policy conference in Portugal, Powell said policymakers need more evidence that inflation is in check before the Fed begins slashing 23-year-high interest rates.

“We just want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation,” Powell said at the conference sponsored by the European Central Bank.

“We want to be more confident, and frankly because the US economy is strong … we have the ability to take our time.”

Data for May showed the Fed’s preferred measure of inflation did not increase at all that month, while the 12-month rate of price increases has ebbed to 2.6%, still above the central bank’s 2% target but on the way down after a scare in the first months of the year.

How ‘upflation’ is driving up prices for oddball products like all-body deodorant, pubic hair razors

Powell said that the latest numbers “do suggest that we’re getting back on a disinflationary path ” but that “more data like what we’ve been seeing recently” is needed before the central bank can lower interest rates.

“We’ve made quite a bit of progress and in bringing inflation back down to our target,” the Fed chair said.

The blue-chip Dow was flat after Powell’s comments in a holiday-shortened week.

The Fed has kept its benchmark policy interest rate steady in the 5.25%-5.5% range since last July.

Investors on Wall Street had originally anticipated as much as three interest rate cuts beginning this summer, but stubbornly high inflation forced the Fed to shelve those plans.

How Baby Boomer ‘Boommates’ are beating inflation and loneliness: ‘I’m happy as a clam’

Now the most optimistic forecasts call for one interest rate cut.

Powell declined to specify whether a September rate cut was on the table.

“We’re well aware that if we go too soon, that we can undo the good work we’ve done,” Powell said.

“If we do it too late, we could unnecessarily undermine the recovery and the expansion.”

CLICK HERE TO SIGN UP FOR OUR MORNING REPORT NEWSLETTER

The latest CPI data for June is scheduled for release on July 11.

The Fed will hold its next policy meeting on July 30-31.

The central bankers will keep an eye on employment and inflation data, including Friday’s release of the monthly employment report for June.

The unemployment rate has been at or below 4% for more than two years, a fact that many Fed policymakers have used to argue for patience in deciding when to cut the central bank’s benchmark policy rate.

“We’re getting a gradually cooling economy, a gradually cooling labor market, progress on inflation, 4% unemployment, 2% growth,” Powell said.

“We’re getting kind of what we want to have.”

With Post Wires

For top headlines, breaking news and more, visit nypost.com.