Fed says rate cuts likely later this year, inflation progress 'not assured'

WASHINGTON

US Federal Reserve Chair Jerome Powell said Wednesday that continued progress on inflation is "not assured" but the central bank will cut its key interest rate later this year.

"If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.

"But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured," Powell told the House Financial Services Committee.

He said the central bank’s policy-setting committee does not expect it will be appropriate to reduce the target range until it has gained "greater confidence" that inflation is moving sustainably toward 2%.

The US' restrictive stance on monetary policy is putting downward pressure on economic activity and inflation, he stressed.

"We remain committed to bringing inflation back down to our 2 percent goal and to keeping longer-term inflation expectations well anchored.

"Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run," he added.