Powell says inflation has surprised to the downside, but not by a lot

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Federal Reserve Board Chairman Jerome Powell speaks during a news conference on December 19, 2018 in Washington, DC.

Inflation has persistently surprised policy makers on the low end, Federal Reserve Chairman Jerome Powell acknowledged on Wednesday, but not enough to stop the central bank’s efforts to move interest rates back to more normal territory.

“Inflation has continued to surprise to the downside, not by a lot, though,” Powell said at a press conference Wednesday after the Fed raised short-term rates another one-quarter percent.

“2018 has been the strongest year since the financial crisis,” Powell said, with growth well above trend. The Federal Open Market Committee, which sets policy, still has a positive forecast for the economy, with growth seen strong enough that unemployment could drop still further.

Powell repeated that the Fed’s goal is inflation running at or around 2 percent, meaning a range would be slightly below to slightly above, what he call’s “symmetrical.”

“We’re very close to 2 percent, and we do believe it is a symmetric goal. That’s how we’re going to look at it,” Powell said. “We haven’t declared victory yet.