Federal Reserve Chairman Jerome Powell told lawmakers on Tuesday that interest rates are likely to be raised more than expected.
Speaking at a hearing before the Senate Banking Committee, Powell said the Fed stands ready to act more broadly if tougher measures to control inflation are needed.
Recall that inflation rose unexpectedly in January and the government reported an unusual increase in the number of jobs.
While part of the effect may be due to warmer weather and other seasonal factors, Powell said the Fed is aware that it could also be a sign that the central bank will need to do more to contain the inflation and perhaps even return to larger rate hikes. more than a quarter of the percentage points originally forecast.
“If the backbone of data indicates the need for faster tightening, then we will be ready to pick up the pace of rate hikes,” Powell said.
The next Fed meeting will be March 21-22.
The government’s monthly jobs report and inflation report are also due out this Friday, which will be key in deciding on tougher measures.
While inflation has “declined moderately” since its peak last year, Powell said, “the process of getting inflation back to 2% has a long way to go and will likely be bumpy.”
In his speech, Powell noted that much of the impact of central bank monetary policy can still be expected as the labor market continues to experience a 3.4% unemployment rate not seen since 1969. and significant wage growth. .
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