Fed Chair Powell could signal the likelihood of high rates for longer in closely watched speech
Jerome Powell delivers a high-profile speech Friday in Jackson Hole, Wyoming, many analysts think he could make one thing clear: That the Fed plans to keep its benchmark interest rate at a peak level for longer than had been expected.
Powell isn't likely to say whether the Fed will continue raising rates. But he may signal that any rate cuts are unlikely until well into next year.
The central bank has already helped drive inflation down from painfully high levels. But Fed officials have said they need to keep rates high to further slow borrowing and spending and reduce inflation to their 2% target.
The Fed chair's speech — at an annual conference of central bankers — comes at a time of heightened uncertainty about the economy and interest-rate policies.
Businesses are still hiring, and consumer spending has remained resilient even while inflation has eased from a peak of 9.1% in June 2022 to 3.2%.
At the same time, «core» inflation, which excludes volatile food and energy prices, has remained elevated at 4.7% despite the Fed's streak of 11 rate hikes beginning in March 2022. And by raising its key rate from near zero to a 22-year high of 5.4%, the Fed has made borrowing much more expensive for consumers and businesses.
