WASHINGTON (AP) 鈥� Federal Reserve Chair Jerome Powell suggested Thursday that the Fed is in no hurry to further raise its benchmark interest rate, given evidence that inflation pressures at a gradual pace.
At the same time, in a panel discussion at the International Monetary Fund, Powell to help reduce inflation to the Fed's 2% target level.
鈥淲e are not confident," he said, that the Fed鈥檚 benchmark rate is high enough to steadily reduce inflation to its 2% target.
Powell added: 鈥淲e know that ongoing progress toward our 2% goal is not assured. Inflation has given us a few head fakes."
He noted, for example, that inflation had declined for five straight months during 2021 before reversing later that year and heading higher.
Powell said that "if it becomes appropriate鈥� to raise rates further, 鈥渨e will not hesitate to do so鈥� but said that for now it isn鈥檛 鈥漚ppropriate鈥� to increase the Fed's benchmark rate.
For now, the Fed chair said, he believes the central bank faces nearly equal risks of raising its benchmark rate too high, which could derail the economy, or not raising it high enough, which could allow inflation to persist or worsen.
鈥淲e will continue to move carefully,鈥� he said, a phrase he has used often that is widely interpreted to mean that the Fed will closely monitor incoming data but it isn't leaning toward a hike.
Powell's remarks were interrupted by climate-change protestors, after which he was briefly escorted off stage. He resumed his remarks several minutes later.
The Fed has raised its key rate 11 times since March 2022, leading to much higher rates on many consumer and business loans. Last week, at a news conference, that higher longer-term interest rates, including a higher yield on the 10-year Treasury note, could help slow the economy and cool inflation without further rate hikes.
The central bank's benchmark short-term rate, now about 5.4%, is at its highest level in 22 years. Yet the Fed has raised rates only once since May, and most economists have said they think the central bank is likely done tightening credit.
Since the Fed held its policy meeting last week, the government reported that and that the unemployment rate ticked up again, to a still-low 3.9%. Though employers added a solid 150,000 jobs last month, the data pointed to a cooler job market and more modest pay growth. Fast-growing wages are good for workers but can lead employers to raise prices and perpetuate inflation.
On Thursday, Powell鈥檚 remarks followed those of several other Fed officials who generally expressed the view that the central bank should closely monitor upcoming economic data before taking any further action on interest rates.
Tom Barkin, president of the Federal Reserve Bank of Richmond, said he expects the economy to slow in the coming months and bring inflation back down toward the Fed鈥檚 2% target. Annual inflation, as measured by the government鈥檚 consumer price index, has sunk from a 9.1% peak in June of last year but is still 3.7%.
Whether a reduction in inflation 鈥渞equires more from us remains to be seen,鈥� Barkin said, 鈥渨hich is why I supported our decision to hold rates at our last meeting.鈥�
Kathleen O鈥橬eill Paese, the interim president of the Federal Reserve Bank of St. Louis, also expressed support for a wait-and-see approach to observe whether inflation continues to ease in the coming months. O鈥橬eill Paese said 鈥渋t would be unwise to suggest that further rate hikes are off the table.鈥�
But she added that the Fed鈥檚 benchmark rate is 鈥渆xerting modest downward pressure on inflation,鈥� so officials 鈥渃an afford to await further data before concluding鈥� that more rate hikes might be needed.
Christopher Rugaber, The Associated Press
