Federal Reserve Chair Powell warns of possible further interest rate hikes to address inflation

The Chairman of the Federal Reserve, Powell, stated that inflation is still too high and will raise interest rates further when appropriate.

Fed Chair Powell: Continuing the Fight Against High Inflation

The Chairman of the U.S. Federal Reserve, Jerome Powell, recently stated that inflation continues to remain elevated and requires further action.

During the annual Federal Reserve conference, he noted, "While the current decline in inflation from its peak is a positive development, the readings still exceed the range that policymakers can tolerate. If necessary, we are prepared to raise interest rates to ensure that inflation continues to move down to our target."

Recent labor statistics have shown a slower pace of price increases in June and July, with core inflation growing by 0.2% each month.

However, Powell emphasized, "While the data for these two months is encouraging, more solid evidence is needed to confirm a scenario of sustainable inflation decline." He further stated that it is premature to claim success in combating inflation at this stage. He added that resolving the inflation issue requires a balanced and long-term strategy: "Being too aggressive could harm the economy, but doing too little could lead to entrenched inflation."

Possible Another Rate Hike This Year

Furthermore, Powell's remarks come after 11 consecutive rate hikes, with the Fed's main rate now at its highest level in 22 years, ranging between 5.25% and 5.5%. According to forecasts, most FOMC officials believe there could be another rate hike this year. However, the Chairman did not explicitly indicate the next steps, only mentioning that the Fed will "carefully" formulate strategies based on economic data, prospects, and risk assessments. He emphasized that the Fed may need to adjust its strategy direction before economic growth slows down.

Additionally, Powell delved into three key indicators of inflation in his speech: core goods, housing services, and non-housing services. He stated that non-housing services are the most challenging to estimate, but progress in this sector is crucial for restoring price stability.