Federal Reserve Chairman Jerome Powell reiterated Thursday that the US central bank is likely to raise interest rates at least once more for the remainder of the year due to persistently high inflation in the service sector of the economy and surprisingly tight job market.
Before a commission of the federal Senate, Powell pointed out that "inflation has moderated a little since the middle of last year." However, the Fed Chairman pointed out that "inflationary pressures remain high."
Powell testified before the Senate Banking Committee on the second day of semiannual testimony before the US Congress. Powell testified before the House Financial Services Committee on Wednesday and delivered a similar message that other interest rate hikes are likely this year.
On Thursday, Powell commented that "almost all" of the Fed's policymakers "anticipate that it will be appropriate to raise interest rates slightly by the end of the year."
In May, consumer prices rose 4% compared to the previous 12 months, below the year-on-year high of 9.1% reached in June 2022, but still doubling the 2% inflation target set by the Federal Reserve.
The central bank has increased its benchmark rate aggressively since March 2022 in order to slow down the economy and reduce inflationary pressure. At their meeting last week, Fed policymakers left their benchmark interest rate unchanged after 10 consecutive hikes, buying time to see what impact the rate hike is having on the economy. But rate hikes could resume after a pause: 12 of the Fed's 18 policymakers indicated last week they expect at least two more hikes this year.
High interest rates have wreaked havoc on the US housing market as it is dependent on mortgage rates, which have risen sharply since the Fed launched its anti-inflation campaign.
