WASHINGTON: The Federal Reserve will “keep pushing” to tighten US monetary policy until it is clear that inflation is declining, Fed Chair Jerome Powell said on Tuesday.
“What we need to see is inflation coming down in a clear and convincing way and we’re going to keep pushing until we see that,” Powell said at a Wall Street Journal event. “If we don’t see that, we will have to consider moving more aggressively” to tighten financial conditions.
As it hikes rates at coming policy meetings, the US central bank would evaluate “meeting by meeting, data reading by data reading” how the economy and inflation are behaving, Powell said. Inflation is running at more than three times the Fed’s 2% target.
If the pace of price increases does not slow, Powell said the Fed, which has raised its policy rate by three-quarters of a percentage point this year, would not flinch from raising rates to more restrictive levels.
“If that involves moving past broadly understood levels of ‘neutral’ we won’t hesitate to do that,” Powell said, referring to the rate at which economic activity is neither stimulated nor constrained. “We will go until we feel we are at a place where we can say ‘yes, financial conditions are at an appropriate place, we see inflation coming down.’”