Powell reinforces Fed's cautious approach toward further interest rate hikes

abcnews.go.com:

Federal Reserve Chair Jerome Powell suggested that the Fed is in no hurry to further raise its benchmark interest rate, given evidence that inflation pressures are continuing to ease at a gradual pace

WASHINGTON — Federal Reserve Chair Jerome Powell suggested Thursday that the Fed is in no hurry to further raise its benchmark interest rate, given evidence that inflation pressures are continuing to ease at a gradual pace.

At the same time, in a panel discussion at the International Monetary Fund, Powell did not rule out another rate hike to help reduce inflation to the Fed's 2% target level. Inflation, as measured by the U.S. consumer price index, has sunk from a 9.1% peak last year but is still 3.7%.

“We are not confident," Powell said, that the Fed’s benchmark rate is high enough to steadily reduce inflation to 2%.

He added: “We know that ongoing progress toward our 2% goal is not assured. Inflation has given us a few head fakes."

Powell noted, for example, that inflation had declined for five straight months during 2021 before reversing later that year and heading higher.

He said that “if it becomes appropriate” to raise rates further, “we will not hesitate to do so,” a phrasing that suggests that for now it isn’t appropriate to increase the Fed's benchmark rate.

For now, the Fed chair said, he believes the central bank faces nearly equal risks of raising its benchmark rate too high, which could derail the economy, or not raising it high enough, which could allow inflation to persist or worsen.

“We will continue to move carefully,” he said, a phrase he has used often that is widely interpreted to mean that the Fed will closely monitor incoming data but it isn't leaning toward a hike.

Powell's remarks were interrupted