Powell signals more hikes ahead if US economy stays strong

Federal Reserve Chairman Jerome Powell signaled today that he expects the Fed to continue gradually raising interest rates if the US economic expansion remains strong.

Powell added that while annual inflation has risen to near the Fed's 2 per cent target rate, it doesn't seem likely to accelerate above that point. That suggests that he doesn't foresee a need for the Fed to step up its rate hikes. Next month, the Fed is widely expected to resume raising rates.

Speaking to an annual conference of central bankers in Jackson Hole, Wyoming, Powell said the Fed recognises the need to strike a careful balance between its mandates of maximizing employment and keeping price increases stable.

He said a gradual approach to rate hikes is the best way to navigate between the risks of raising rates too fast and "needlessly shortening the expansion" and moving too slowly and risking an overheated economy.

"My colleagues and I," the Fed chairman said in his speech, "are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent."
"The economy is strong," he said. "Inflation is near our 2 percent objective and most people who want a job are finding one. We are setting policy to do what monetary policy can do to support continued growth, a strong labor market and inflation near 2 percent."
At the same time, Powell said that in case of another financial crisis or intensified concern about high inflation, "We will do whatever it takes."