Current:Home > FinancePowell says Fed could raise interest rates further if economy, job market don't cool -TrueNorth Finance Path
Powell says Fed could raise interest rates further if economy, job market don't cool
View
Date:2025-04-12 14:02:33
Federal Reserve Chair Jerome Powell said Friday the central bank could raise interest rates further if the economy and job market don’t weaken more substantially, suggesting that additional hikes may lie ahead even if inflation continues to ease.
"We are attentive to signs that the economy may not be cooling as expected," Powell said at the Fed’s annual conference in Jackson Hole, Wyoming. “Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further (rate increases).”
He added that job and wage growth have slowed and job openings are still high but moving lower.
“Evidence that tightness in the labor market is no longer easing could also call for a monetary policy response,” Powell said.
At the same time, he said the Fed has made progress against inflation and will move "carefully" as it weighs raising rates enough to lower inflation against going too far and nudging the economy into a recession.
Fed hike impactFed rate hikes don't just fight inflation. They hurt economy over long-term, study says
The economy grew at a stronger than expected 2.4% annual rate in the second quarter and consumer demand has been surprisingly robust despite high interest rates and inflation. Meanwhile, job growth has slowed significantly – to 187,000 in July from an average 312,000 the first three months of the year. But the unemployment rate remains historically low at 3.5%.
Fed officials, and economists, have grown increasingly optimistic that the Fed can help lower inflation without tipping the economy into a recession. But that ideal scenario could be at risk if the central bank lifts rates further to cool the economy out of concern that growth that’s not sufficiently soft could reignite inflation.
The Fed has raised its key interest rate to a range of 5.25% to 5.5% -- a 22-year high -- and many economists believe it will now hold rates steady, but others say officials could agree to another hike this year.
While Powell noted that inflation has come down, he said it’s still too high and the Fed may need to do more to lower annual consumer price increases to the Fed’s 2% goal. The Fed's preferred measure of annual inflation, which excludes volatile food and energy items, has fallen from 5.4% in February 2022 to 4.3% in July.
“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 said, suggesting that rate cuts aren't likely anytime soon.
Although both pandemic-related supply chain snags and consumer demand have eased, “the process still has a long way to go,” he said.
Powell, however, didn't say the Fed is leaning toward additional rate increases and struck a balance been raising rates too much and too little.
“Doing too much could also do unnecessary harm to the economy,” he said. "Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and theevolving outlook and risks."
“Based on this assessment, we will proceed carefully as we decide whether to tighten further, or instead, to hold the policy rate constant and await further data.”
veryGood! (54992)
Related
- Bodycam footage shows high
- Selling the OC’s Alex Hall Shares Update on Tyler Stanaland Relationship
- Harris and Walz talk Cabinet hires and a viral DNC moment in CNN interview | The Excerpt
- Is olive oil good for you? The fast nutrition facts on this cooking staple
- Selena Gomez's "Weird Uncles" Steve Martin and Martin Short React to Her Engagement
- Civil rights activist Sybil Morial, wife of New Orleans’ first Black mayor, dead at 91
- The Daily Money: No diploma? No problem.
- Trial begins in Florida for activists accused of helping Russia sow political division, chaos
- Megan Fox's ex Brian Austin Green tells Machine Gun Kelly to 'grow up'
- Jools Lebron filed trademark applications related to her ‘very demure’ content. Here’s what to know
Ranking
- Paula Abdul settles lawsuit with former 'So You Think You Can Dance' co
- From attic to auction: A Rembrandt painting sells for $1.4M in Maine
- Bowl projections: College Football Playoff gets shakeup with Miami, Missouri joining field
- Guns flood the nation's capital. Maryland, D.C. attorneys general point at top sellers.
- Trump issues order to ban transgender troops from serving openly in the military
- Harris and Walz talk Cabinet hires and a viral DNC moment in CNN interview | The Excerpt
- Search goes on for missing Virginia woman, husband charged with concealing a body
- Trial begins in Florida for activists accused of helping Russia sow political division, chaos
Recommendation
Most popular books of the week: See what topped USA TODAY's bestselling books list
Variety of hunting supplies to be eligible during Louisiana’s Second Amendment sales tax holiday
Elton John shares 'severe eye infection' has caused 'limited vision in one eye'
Eli Manning Shares What Jason Kelce Will Have Over Him As An NFL Commentator
Angelina Jolie nearly fainted making Maria Callas movie: 'My body wasn’t strong enough'
US Open: Frances Tiafoe and Taylor Fritz will meet in an all-American semifinal in New York
The CEOs of Kroger and Albertsons are in court to defend plans for a huge supermarket merger
A man charged with killing 4 people on a Chicago-area L train is due in court