'A long way to go': Fed Chair Jerome Powell says he doesn't see inflation cooling to 2% until about 2025 — here's what that means for your money

“The process of getting inflation back down to 2% has a long way to go,” Powell said.

Inflation is cooling — but not fast enough

After the consumer price index increased by 0.2% in June, America’s central bank raised the federal funds rate to a range of 5.25% to 5.5%.

While the current annual inflation rate now stands at 3.0% — a far cry from last June’s 9.1% — the Fed projects there’s still plenty of time before it hits the 2% mark.

What this means for you

Consumers can expect rates on their credit cards and other variable-rate loans to potentially keep rising if the Fed decides another hike is on the horizon.

When the Fed holds its next meeting in September, Powell says they’ll be assessing economic activity and inflation data to determine whether to continue or hit pause on interest rate growth.

Will the Fed keep hiking rates until 2025?

You don’t need to worry about facing a prolonged series of hikes in order to reach the 2% target, according to Powell.

“If we see inflation coming down credibly, sustainably, then we don’t need to be at a restrictive level anymore,” he explained. “You’d stop raising long before you got to 2%.”