By Bitcoin.com - 8 months ago - Reading Time: 2 minutes
Powell: More Rate Hikes May Be Needed to Curb Inflation
The chairman of the U.S. Federal Reserve, Jerome Powell, warned on Friday that inflation remains too high and signaled the central bank may continue raising interest rates to get it under control. In remarks at the Jackson Hole symposium, Powell acknowledged recent progress in lowering inflation but said there’s “substantial further ground to cover” before returning to the Fed’s 2% target.
Powell Signals Further Rate Hikes Amid Lingering Inflation Concerns; Pledges ‘We Will Keep at It Until the Job Is Done’
While headline inflation has fallen from its peak of 7% in June 2022, Powell focused his remarks on core inflation, which excludes volatile food and energy prices. Core inflation remains elevated at 4.3% and Powell said “sustained progress is needed” through “restrictive monetary policy” to bring it down further.
Powell pointed to declining goods prices and a cooling housing sector as evidence that rate hikes are working to curb demand. But he also cited high service prices and an exceptionally tight labor market as areas needing improvement in the coming months.
“Given the size of this sector, some further progress here will be essential to restoring price stability,” Powell said. “Over time, restrictive monetary policy will help bring aggregate supply and demand back into better balance, reducing inflationary pressures in this key sector.”
The Fed chair indicated officials will continue assessing economic data but are prepared to raise rates further if appropriate. He reiterated the Fed’s commitment to reduce inflation while cautioning that doing so will likely require below-trend economic growth for a period.
“We will keep at it until the job is done,” Powell emphasized in his remarks. He said uncertainty around how much additional tightening is needed makes the Fed’s task challenging. But he stressed the risks of not doing enough outweigh concerns about tightening too rapidly.
While acknowledging a slowing economy, Powell said the Fed must see concrete evidence of easing inflationary pressures. His remarks suggest additional rate hikes lie ahead if price and wage growth fail to moderate substantially in the coming months.
What do you think about Powell’s statements at this year’s Jackson Hole symposium? Share your thoughts and opinions about this subject in the comments section below.
Original source: Bitcoin.com