Powell signals more hikes ahead if US economy stays strong
WASHINGTON — Federal Reserve Chairman Jerome Powell signalled Friday that he expects the Fed to continue gradually raising interest rates if the U.S. economic expansion remains strong.
Powell added that while annual inflation has risen to near the Fed’s 2 per cent target rate, it doesn’t seem likely to accelerate above that point. That suggests that he doesn’t foresee a need for the Fed to step up its rate hikes. Next month, the Fed is widely expected to resume raising rates.
Speaking to an annual conference of central bankers in Jackson Hole, Wyoming, Powell said the Fed recognizes the need to strike a careful balance between its mandates of maximizing employment and keeping price increases stable. He said a gradual approach to rate hikes is the best way to navigate between the risks of raising rates too fast and “needlessly shortening the expansion” and moving too slowly and risking an overheated economy.
“My colleagues and I,” the Fed chairman said in his speech, “are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labour market, and inflation near 2 per cent.”