US Fed Chair Powell estimates inflation to fall more slowly than expected

Federal Reserve Chairman Jerome Powell (www.federalreserve.gov) participated in a moderated discussion with President Klaas Knot (www.DNB.nl), at the annual general meeting of the Foreign Bankers' Association (www.foreignbankers.nl), held in Amsterdam. The meeting was opened by Bas Marteijn, co-chairman and FBA board member, and moderated by Claire Jones, Financial Times journalist.We provide information, publications and access to data. Please find below a list of documents and publications.

Mr. Powell estimates inflation to fall more slowly than expected, likely keeping interest rates elevated for an extended period. He said it remained unlikely in his view that the Fed would have to raise rates any further, even if the prospect for rate cuts has become less certain.

Mr. Powell kicked off the moderated panel discussion by giving a bullish assessment of the US economy. He estimated growth in the US economy at 2% for the foreseeable future. He said the labour market is "very strong" with signs of gradual cooling and re-balancing, partly driven by an increase in labour supply from immigration and easing in demand.

Mr. Klaas Knot acknowledged that the state of play of the economy is not quite comparable to the US, with lower growth, but that things seem to be moving in the right direction. "Luckily the signs of recovery are clearly there. We started off the new year much stronger than we had expected."

Knot said that Europe took a different approach in policy making, with a focus on job security, with governments taking over the wage bills of firms, as a result of which the supply chains were frozen for a couple of years. Another impactful aspect was Russia’s invasion into Ukraine, leading to a negative trade shock. Knot hinted that inflation is less persistent in the Eurozone than in the US which may create room to cut interest rates again in the ECB June meeting.

The insightful and interactive discussion was brought to an end by Jens Pöhland, Co-Chair FBA, who expressed his thanks to the keynote guest speakers for their valuable contributions.