The continued strength of the U.S. economy could require further interest rate increases, Federal Reserve Chair Jerome Powell said.
Jerome Powell, chairman of the US Federal Reserve, at the Jackson Hole economic symposium in Moran, Wyoming, US, on Friday, Aug. 25, 2023. Powell said the US central bank is prepared to raise interest rates further if needed and intends to keep borroThe continued strength of the U.S. economy could require further interest rate increases, Federal Reserve Chair Jerome Powell said Friday in a closely watched speech that also highlighted the uncertain nature of the economic outlook.
"We are attentive to signs that the economy may not be cooling as expected," Powell said. "We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.""Although inflation has moved down from its peak — a welcome development — it remains too high.
Powell's speech, at an annual conference of central bankers in Jackson Hole, Wyoming, highlighted the uncertainties surrounding the economy and the complexity of the Fed's response to it. It marked a contrast to his remarks here a year ago, when he bluntly warned that the Fed would continue its campaign of sharp rate hikes to rein in spiking prices.
"When it comes to another rate hike, the chair still very much has his finger on the trigger, even if it’s a bit less itchy than it was last year," said Omair Sharif, chief economist at Inflation Insights. Substantially higher loan rates, a direct result of the Fed’s rate hikes, have made it harder for Americans to afford a home or a car or for businesses to finance expansions. At the same time, items like rent, restaurant meals and other services are still getting costlier. "Core" inflation, which excludes volatile food and energy prices, has remained elevated despite the Fed’s streak of 11 rate hikes beginning in March 2022.
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