Federal Reserve Chair Jerome Powell said Friday that the continued strength of the U.S. economy could require further interest rate increases.
“We are attentive to signs that the economy may not be cooling as expected,” the Fed chair 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.”
Powell said that the U.S. economy has been experiencing a growth rate that surpasses earlier expectations and noted that consumers have been actively spending, which contributes to economic expansion.
The combination of robust economic growth and active consumer spending can potentially lead to higher levels of inflation.
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Powell indicated that these trends might contribute to sustained inflation pressures within the economy and restated the Federal Reserve’s commitment to its monetary policy approach.
According to Powell, the Federal Reserve aims to keep its key interest rate at an elevated level until the rate of price increases (inflation) aligns with the central bank’s target of 2%.
This suggests that the Federal Reserve will use interest rate adjustments as a tool to manage inflation and keep it within its desired range.
Powell said that inflation has decreased from its peak levels, which he considered to be positive news.
This suggests that the upward pressure on prices might be easing, contributing to a more stable economic environment.
“But two months of good data,” he added, “are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. Although inflation has moved down from its peak — a welcome development — it remains too high.”
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