KANSAS CITY, MO (KCTV/AP) -- When out shopping, most Americans like lower prices. But the Federal Reserve sees things a little differently.
Fed Chairman Jerome Powell instead says that low inflation, along with low interest rates, are "longer-term challenges" for the United States.
In a brief speech in Kansas City, Missouri, Powell also acknowledged that such a view might be confounding to many Americans: "You may be asking, 'What's wrong with low inflation and low interest rates?'" he said.
The question highlights a problem for the Fed: It is struggling to get inflation closer to its 2% target, but also has to explain to the public why it wants to push inflation higher.
The Fed targets 2% inflation as a cushion against deflation, a destabilizing fall in prices and wages that can cause a recession.
While in Kansas City, Powell also meet with business leaders about local concerns, like labor market conditions, banking and community development. He received input for next year’s policy goals which trickle down to consumers in a few different ways.
For example, credit card interest rates typically mirror what the fed does. You may also see adjustable mortgage rates and car loans follow federal interest rate trends. The fed cut rates twice in the past two months.
JP Morgan economists say they expect another drop, but it could depend on outside factors like the trade war with China and Brexit.