Powell Says Inflation is Too High, More Rate Hikes Possible

Jerome Powell, Chair of the Federal Reserve, conveyed the ongoing need to remain vigilant against inflation in his address at the Kansas City Fed’s annual retreat in Jackson Hole, Wyoming. While acknowledging that inflation has receded from its peak, he stressed its current levels still exceed the Fed’s comfort zone. Powell suggested that it’s premature to claim victory against inflation, noting that the recent positive data in June and July is just the beginning. He stated, “Doing too little could allow above-target inflation to become entrenched… Doing too much could also do unnecessary harm to the economy,” highlighting the balance they aim to strike.

Furthermore, Powell referenced the 11 prior interest rate hikes that have positioned the Fed’s principal interest rate at a range of 5.25%-5.5%, marking the highest level in over two decades. Powell hinted at no imminent rate cuts and instead stated that the Fed is ready to raise rates further if needed. Lastly, in response to external pressure to amend the 2% inflation target, Powell remained resolute, stating, “Two percent is and will remain our inflation target.”