WASHINGTON: Federal Reserve Chair Jerome Powell said Wednesday that additional US interest rate hikes will likely be needed to tame high inflation, ahead of two days of testimony on Capitol Hill.
Powell’s appearances before the House and Senate come shortly after the US central bank’s rate-setting Federal Open Market Committee (FOMC) voted to hold interest rates steady following 10 consecutive hikes in little more than a year.
“Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” he said in remarks prepared for the House of Representatives’ Committee on Financial Services.
Fed leaves rates steady, sees two small hikes by end of 2023
The Fed has already raised its benchmark lending rate by five percentage points since March 2022, from close to zero to a range between 5.0 and 5.25 percent.
But despite these aggressive moves, inflation remains “well above” the Fed’s long-run target of two percent, Powell said Wednesday.
His scheduled appearance before Congress to discuss the Fed’s semiannual report on monetary policy gives policymakers a chance to question the bank’s most senior official at a time of high interest rates and slowing economic growth.
Alongside its interest rate decision on June 14, the Fed also published updated economic forecasts which suggested that another half percentage-point of increases may be needed this year.
The Fed also lifted its 2023 GDP growth projections to 1.0 percent from 0.4 percent in March.
Median inflation expectations for the year nudged down slightly to 3.2 percent, while core inflation expectations, which excludes volatile food and energy prices, rose to an annual rate of 3.9 percent, the Fed said.
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