Federal Reserve Chair Jerome Powell on Friday struck a hawkish tone during the annual central bank gathering in Wyoming: Inflation remains too high, and additional interest rate hikes may be warranted.
In his hotly anticipated speech at the Kansas Federal Reserve’s Jackson Hole symposium, Powell noted that while inflation has fallen considerably in recent months, it remains far from acceptable levels.
“Although inflation has moved down from its peak—a welcome development—it remains too high,” he said. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
The Fed is scheduled to meet three more times this year, in September, November and December.
Policymakers have raised interest rates sharply over the past year, approving 11 rate hikes in hopes of crushing inflation and cooling the economy. In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.
Hiking interest rates tends to create higher rates on consumer and business loans, which then slows the economy by forcing employers to cut back on spending.
Higher rates have helped push the average rate on 30-year mortgages above 7% for the first time in years. Borrowing costs for everything from home equity lines of credit, to auto loans and credit cards have also spiked.