WASHINGTON (AP) — With inflation in the United States still excessive, most Federal Reserve officials expect to raise interest rates further this year…
With inflation in the United States still excessive, most Federal Reserve officials expect to raise interest rates further this year, Chair Jerome Powell said in prepared testimony to be delivered to a House committee Wednesday.
“Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go,” Powell said on the first of two days of semi-annual testimony on Capitol Hill.
Even so, the Fed last week kept interest rates unchanged after 10 straight hikes so it could take time to gauge how higher borrowing rates have affected the economy, Powell said. The contrast between the Fed’s stated concern over still-high inflation and its decision to skip a rate hike has heightened uncertainty about its next moves. The hazier messaging suggests that Powell is seeking to balance competing demands from those Fed officials who want to keep raising rates and others who feel the central bank has done enough.
In his remarks Wednesday, Powell also suggested that the Fed chose to keep its key interest rate steady so it could assess the impact of three large bank failures this spring on the banking sector and whether the failures would reduce credit to consumers and businesses and slow the economy.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
WASHINGTON Federal Reserve Chair Jerome Powell will begin two days of hearings before Congress on Wednesday that will likely focus on the question that consumed the central bank last week: How far and how fast will the Fed raise its key interest rate from here?
The hearings, beginning with the House Financial Services Committee, follow a Fed meeting last week that produced a muddled picture of its likely next steps. The 18 members of its policy committee predicted two more interest rate hikes this year — one more than analysts had expected — to fight inflation, which they now think will be higher next year than they previously forecast.
