Federal Reserve Chairman Jerome Powell said Wednesday that more interest rate hikes are likely to come as the central bank works to tamp down inflation pressures, which he said “continue to run high.”
“Nearly all” participants in the Federal Open Market Committee (FOMC) “expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” Powell said in prepared remarks ahead of a Wednesday hearing to be held by the House Financial Services Committee.
The Fed’s rate-setting committee decided last week to keep interest rates where they are for the first time since last January, following a string of rate hikes.
Powell said inflation “has moderated somewhat since the middle of last year” amid tightening monetary policy, but “nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.”
Though the Fed decided to keep rates unchanged for now, the range — at 5 percent to 5.25 percent — is still at the highest level since 2008.
Powell is set to testify before the House panel for a semiannual report to Congress on monetary policy.
“We have raised our policy interest rate by 5 percentage points since early last year and have continued to reduce our securities holdings at a brisk pace. We have been seeing the effects of our policy tightening on demand in the most interest rate–sensitive sectors of the economy. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation,” the Fed Chairman said in the prepared remarks.
Members of the FOMC expect to hike interest rates by another 0.5 percentage points before the end of the year, according to economic projections released last week. Fed officials only expected to hike one more time in March.
FOMC members also expect the economy to grow at a faster rate, the jobless rate to stay lower, and inflation to remain higher than they expected they would in March.
Updated at 12:21 p.m. EDT.