Powell expects more Fed rate hikes ahead as inflation fight 'has a long way to go'
Federal Reserve Chairman Jerome Powell on Wednesday affirmed that more interest rate increases are likely ahead until additional progress is made on bringing down inflation.
Speaking a week after Federal Open Market Committee officials decided for the first time in more than a year not to push rates higher, the central bank leader indicated that the move likely was just a brief respite rather than an indication that the Fed is done hiking.
«Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,» Powell said in prepared remarks for testimony he will deliver to the House Financial Services Committee. The speech is part of his semiannual appearance on Capitol Hill to update lawmakers on monetary policy.
Following last week's two-day FOMC meeting, officials indicated they see rate increases totaling 0.5 percentage point through the end of 2023. That would indicate two additional hikes, assuming quarter-point moves. The Fed's benchmark borrowing rate is currently pegged in a range between 5%-5.25%.
Noting that inflation has cooled but «remains well above» the Fed's 2% target, Powell said the central bank still has more work to do.
«Inflation has moderated somewhat since the middle of last year,» he said. «Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go.»
Fed officials generally prefer to look at «core» inflation, which excludes food and energy prices. That is showing inflation running at a 4.7% year-over-year rate through April, according to the central bank's preferred measure of personal consumption expenditures prices. The core consumer price index for May was at 5.3%.
M
Read more on cnbc.com
