Federal Reserve Chairman Jerome Powell on Tuesday said interest rates are likely to be higher than expected because the inflation fight is not over.
Powell did not say how high the rates will go.
The benchmark rate is around 5.25%-5.5% after the Fed hiked rates several times in 2022.
CNBC reported:
Federal Reserve Chairman Jerome Powell on Tuesday cautioned that interest rates are likely to head higher than central bank policymakers had expected.
Citing data earlier this year showing that inflation has reversed the deceleration it showed in late 2022, the central bank leader warned of tighter monetary policy ahead to slow a growing economy.
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in remarks prepared for two appearances this week on Capitol Hill. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
Those remarks carry two implications: One, that the peak, or terminal, level of the federal funds rate is likely to be higher than the previous indication from the Fed officials, and, two, that the switch last month to a smaller quarter-percentage point increase could be short-lived if inflation data continue to run hot.
WATCH:
Fed Chair Jerome Powell delivers his semi-annual monetary policy report to US lawmakers and dives into the central bank’s inflation view https://t.co/grnxOascUs pic.twitter.com/Q6r2dq13HH
— Bloomberg TV (@BloombergTV) March 7, 2023
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