US Fed won't wait for 2% inflation to cut rates: Powell

The Federal Reserve Chairman Jerome Powell stated that the central bank will not wait for inflation to decline to its 2% target before lowering interest rates, highlighting the long and variable lags in the effects of monetary policy. 

Speaking at the Economic Club in Washington, D.C., on July 15, Powell said, "If you wait until inflation is down to 2%, you're likely to be waiting too long, and the level of tightening you would have in place would likely push inflation well below 2%." 

He explained that policymakers are looking for confidence that inflation will return to the 2% level. He highlighted that recent favorable data has bolstered this confidence and dismissed the likelihood of a severe downturn in the US economy. 

The Federal Reserve board is set to meet from July 30 to 31. However, under central bank rules, policymakers cannot comment on monetary policy from July 20, until the Friday following the meeting.