Jerome Powell, the chair of the Federal Reserve, used a closely watched speech to make clear that the central bank does NOT yet think it has gotten “inflation” fully under control and stands ready to raise interest rates further if needed.
Powell, who was delivering a this morning at the Federal Reserve Bank of Kansas City’s annual Jackson Hole conference in Wyoming, said that the Fed would “proceed carefully” as it decided whether to make further policy adjustments after a year and a half in which it had pushed interest rates up sharply.
While acknowledging that progress has been made, the central bank leader said inflation is still above where policymakers feel comfortable. He noted that the Fed will remain flexible as it contemplates further moves, but gave little indication that it’s ready to start easing up anytime soon.
Powell indicated it’s too soon to declare victory, even with data this summer running largely in the Fed’s favor. June and July both saw easing in the pace of price increases.
Central bankers have lifted interest rates to a range of 5.25 to 5.5%, up from near-zero as recently as March 2022, in a bid to cool the economy and wrestle inflation lower. They have been keeping the door open to the possibility of one more rate increase, and have been clear that they expect to leave interest rates elevated for some time.
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