BlockBeats news, on December 19, Fed Chairman Powell explained at a press conference why inflation above the Fed's target is compatible with further rate cuts. He said that even if inflation only drops to 2.5% next year, the Fed may still cut interest rates next year as the dot plot shows, because inflation will be moving in the right direction.
Powell further explained that if the annual rate of core PCE inflation drops to 2.5% next year, what we see is that meaningful progress has been made in reducing inflation.
According to the latest FOMC quarterly economic forecast summary, the Fed expects PCE and core PCE inflation to only drop to 2.5% in 2025, which is still higher than the Fed's 2% target, and the Fed expects to cut interest rates twice in 2025. (Jinshi)