On Wednesday, Federal Reserve Chair Jerome Powell cautioned that the American public should anticipate further increases in interest rates.
During his testimony before the House Financial Services Committee, Federal Reserve Chair Jerome Powell expressed caution regarding the task of reducing inflation back to the target rate of 2%.
Chair Jerome Powell Acknowledges Significant Pressures
The Personal Consumption Expenditures (PCE) price index showed a year-over-year increase of 4.4% in April, while core PCE prices increased by 4.7%, he acknowledged, indicating that there are still considerable inflationary pressures.
Powell’s remarks followed the Federal Reserve’s decision to maintain its key interest rate, marking the first time since January 2022 that no rate hike was implemented. The Federal Reserve indicated the likelihood of two additional quarter-point rate hikes later this year.
While recognizing the progress made, Powell suggested a more moderate pace of rate increases, stating that speed is no longer of utmost importance. He emphasized that the Federal Open Market Committee anticipates raising interest rates further by the end of the year, making decisions on a meeting-by-meeting basis.
Read more: World Economic Forum: US Struggles To Close Gender Gap
Enhancing Banking System Resilience
Powell emphasized that bringing down inflation might necessitate a phase of economic growth below the expected trend and a certain level of improvement in labor market conditions.
However, he emphasized that achieving price stability is crucial for attaining maximum employment and stable prices in the long term.
Powell’s testimony initiated a two-day appearance before Congress, during which he addressed inquiries about the Federal Reserve’s rate hike strategy. He was also scheduled to appear before the Senate Banking Committee the following day. These meetings form part of the Federal Reserve Board’s semiannual reports to Congress.
Despite the earlier banking sector turmoil, Powell reassured that the banking system remains sound and resilient.
Measures taken by the Federal Reserve, Treasury Department, and Federal Deposit Insurance Corporation have bolstered public confidence. Powell acknowledged the importance of implementing appropriate rules and supervisory practices for banks of considerable size to enhance the system’s strength and resilience.
Read more: Elon Musk Mocks Biden’s Billionaire Tax Plan And Its Potential Donor Displeasure
