Fed's Powell: higher rates may be needed, will move 'carefully'
By Howard Schneider and Ann Saphir
JACKSON HOLE, Wyoming (Reuters) -The Federal Reserve may need to raise interest rates further to cool still-too-high inflation, Fed Chair Jerome Powell said on Friday, promising to move with care at upcoming meetings as he noted both progress made on easing price pressures as well as risks from the surprising strength of the U.S. economy.
«We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data,» Powell said in a keynote address to the Jackson Hole Economic Policy Symposium. «It is the Fed’s job to bring inflation down to our 2% goal, and we will do so.
The Fed has raised rates by 5.25 percentage points since March 2022, and inflation by the Fed's preferred gauge has moved down to 3.3% from its peak of 7% last summer. Although the decline was a „welcome development,“ Powell said, inflation „remains too high.“
»We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective," he said.
In that context, recent data has raised a new concern, he said.
«We are attentive to signs that the economy may not be cooling as expected,» with consumer spending «especially robust» and the housing sector possibly rebounding, Powell said.
The economy continues to grow above trend, Powell said, and if that continues «it could put further progress on inflation at risk and could warrant further tightening of monetary policy.»
His remarks showed the Fed wrestling with conflicting signals from an economy where inflation has by some readings slowed a lot without much cost to the economy — a good outcome, but
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