(USNewsMag.com) – On Aug. 25, Federal Reserve Chairman Jerome Powell stated that there could be more increases to the interest rate in the future.
Powell stated that inflation is still higher than what policymakers feel is comfortable. He did note some progress has been made, saying “inflation has moved down from its peak. However, he added that the Fed is “prepared to raise rates further if appropriate.”
Powell’s speech at the Jackson Hole Economic Symposium hosted by the Kansas City Fed and held in Jackson Hole, Wyoming, echoed the same tone as his speech last year when he warned of “some pain” in getting inflation back to the Fed’s goal of two percent.
Data from June and July was better, but Powell warned that more than two months of data are needed “to build confidence” that inflation is going down.
He discussed the three key metrics that will go into deciding to raise the rate, breaking inflation into the categories of goods, housing services, such as rent, and non-housing services, such as food and transportation. Powell stated that the Fed is mostly concerned with core inflation, which excludes energy and food prices. He also noted that progress with non-housing services is difficult to track.
The Fed has increased the interest rate 11 times to its highest level in 22 years, to a target range of 5.25–5.5 percent. He did caution that the Fed’s previous tightening moves have probably not yet worked their way through the system.
The Fed meets again in September and then again in November. Powell did not indicate if he sees rates being raised again at either meeting. Powell also did not give any sign that a rate cut was even being considered.
He only stated that they would “proceed carefully” when deciding “to tighten further or, instead, to hold” the rate where it is currently. He added that “we will keep at it until the job is done.”
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