“However, the second risk is that we will not manage to restore price stability and we will allow this high inflation to seep into the economy,” Powell told lawmakers on Wednesday. “We can’t fail at that task. We have to go back to 2% inflation.”
irrigated The president was testifying before the Senate Banking Committee during the first two days of congressional hearings. In his opening remarks, Powell said officials “estimate that ongoing rate hikes would be appropriate,” to ease the hottest price pressure in 40 years.
“Inflation has obviously surprised upwards over the past year, and there may be more surprises ahead. So we have to be nimble in responding to the data coming in and evolving outlook,” he said.
Powell’s remarks reinforced comments at a press conference last week when he and his colleagues at the Federal Open Market Committee raised their benchmark lending rate by 75 basis points — the biggest increase since 1994 — to a range of 1.5% to 1.75%. Gave.
While Powell told reporters that another 75 basis-point increase, or a 50 basis-point move, was on the table for the next meeting in late July, Wednesday’s text made no reference to the size of future rate hikes. . Fed Governor Christopher Waller said on Saturday he would support a 75-basis-point rate hike in July, as economic data is expected to arrive.
“We understand that high inflation is causing difficulties,” Powell said on Wednesday. “We are strongly committed to bringing inflation back down, and we are moving rapidly to do so.”
According to interest rate futures, investors expect the US central bank to peak rates around 3.6 per cent by the middle of next year.
“Financial conditions have tightened and prices have risen and that’s justified,” Powell said in response to a question after his opening remarks. “We need to go ahead and get them.”
The Labor Department’s Consumer Price Index rose 8.6% last month from a year earlier, a four-decade high. Data from the University of Michigan shows that American households expect inflation of 3.3% over the next five to 10 years, the highest since 2008 and up from 3% in May.