Federal Reserve Chairman Jerome Powell on Friday said the central bank’s job on lowering inflation is not done, suggesting that the Fed will continue to aggressively raise interest rates to cool the economy.
“We will keep at it until we are confident the job is done,” Powell said in remarks delivered at the Fed’s annual conference in Jackson Hole, Wyoming.
“While the lower inflation readings for July are welcome, a single month’s improvement falls far short of what the committee will need to see before we are confident that inflation is moving down,” Powell said Friday.
Inflation data on Friday morning showed prices in America rose by 6.3% on a year-over-year basis in July, a notch down from the 6.8% pace measured in June. When stripping out food and energy, the Personal Consumption Expenditures Index showed prices rising by 4.6% compared to a year ago – still well above the Fed’s target of 2%.
The central bank has delivered four consecutive interest rate hikes over the last six months, moving in June and July to raise rates by 0.75%, the Fed’s largest moves since 1994. By raising borrowing costs, the Fed hopes to dampen demand by making home buying, business loans, and other types of credit more expensive.
Short-term interest rates are now in a target range between 2.25% and 2.5%, which some Fed policymakers consider to be the so-called “neutral rate,” or the level rates that is neither stimulative nor restrictive to economic activity.
Powell said more rate hikes will be needed, with “another unusually large” increase still on the table for the Fed’s next meeting in September. The Fed chair reiterated that “at some point,” the Fed will move to slow the pace of its price increases.
Click here to see the full report from Brian Cheung at Yahoo Finance.