On Wednesday, Federal Reserve Chairman Jerome Powell affirmed that more interest rate increases are likely until inflation is brought down further. Speaking a week after the Federal Open Market Committee decided not to raise interest rates for the first time in more than a year, the central bank leader indicated that the move likely represented only a brief respite and not an indication of the end of rate hikes. “Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” Powell said in prepared remarks for testimony he will deliver to the House Financial Services Committee. The speech is part of his semiannual appearance on Capitol Hill to update lawmakers on monetary policy.
Following last week’s two-day FOMC meeting, officials expect 0.5 percentage point increases through 2023. This would indicate two additional increases, assuming a quarter-point increase. The Fed’s benchmark borrowing rate ranges between 5% and 5.25%. Although inflation has cooled but “remains well above” the Fed’s 2% target, Powell said the central bank still has more work. “Inflation has moderated somewhat since the middle of last year,” he said. “Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go.” Fed officials typically focus on “core” inflation, which excludes food and energy prices. That shows inflation running at a 4.7% year-over-year rate through April, according to the central bank’s preferred measure of personal consumption expenditure prices. The core consumer price index for May
