Powell Signals Further Rate Hikes Amid Lingering Inflation Concerns; Pledges ‘We Will Keep at It Until the Job Is Done’
In a speech, Powell addressed the lingering concerns over inflation and signaled the possibility of further rate hikes in the future. Here are the key points:
- Core inflation remains high at 4.3%, and Powell emphasized the need for sustained progress in reducing it through restrictive monetary policy.
- Declining goods prices and a cooling housing sector are evidence that rate hikes are working, but high service prices and a tight labor market still need improvement.
- The Fed is prepared to raise rates further if appropriate, and they will continue to assess economic data.
- Powell reiterated the Fed’s commitment to reducing inflation, even if it means below-trend economic growth for a period.
- Concrete evidence of easing inflationary pressures is needed before considering a slower pace of rate hikes.
Hot Take: Powell’s speech indicates that the Fed is determined to tackle inflation and is willing to continue raising rates if necessary. While they acknowledge the risks of tightening too rapidly, they believe the risks of not doing enough outweigh them. The future path of rate hikes will depend on the moderation of price and wage growth in the coming months.
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