U.S. Federal Reserve Chair Jerome Powell has warned of further interest rate increases, saying that inflation in America remains “too high” at its current level of 3.18%.
Powell issued the warning as the U.S. central bank concluded its annual summer gathering in Jackson Hole, Wyoming on August 25.
While acknowledging that progress has been made in lowering inflation from a peak of 9.1% set in June 2022, Powell said the Fed will remain vigilant in its efforts to bring growth in consumer prices back down to its 2% annualized target.
“Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell said in prepared remarks. “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
Powell added in his latest remarks that it’s still too soon to declare victory on inflation, even with data for June and July showing an easing in the pace of price increases.
U.S. stock markets were volatile after Powell’s speech, but stocks ended up closing higher on August 25 as Treasury yields were mostly up.
Powell’s remarks follow a series of 11 interest rate hikes that have pushed the Federal Reserve’s benchmark interest rate to a target range of 5.25% to 5.50%, the highest level in 22 years.
Markets have priced in little chance of another interest rate hike at the Fed’s September meeting but are pointing to a 50-50 chance of a final rate increase at the central bank’s November meeting.
