Jay Powell, chairman of the Federal Reserve, said reducing inflation would still take “a significant period of time” as he stressed the need for further interest rate hikes in the face of stronger data on the labor market.
Powell’s comments on Tuesday were his first since data unexpectedly showed a jump in job growth in January, suggesting the U.S. central bank may need to go further in its monetary tightening to cool the economy. economy.
The Fed raised its main interest rate from near zero to a target range of between 4.5% and 4.75% in less than a year. Last week it slowed the pace of its rate hikes to 25 basis points from 50 at the end of last year and 75 before that, suggesting its most aggressive efforts to tame inflation were behind it.
But Powell said the “disinflationary process” still had “a long way to go” and was still in its early stages. “It’s probably going to be bumpy,” he said during remarks at the Economic Club in Washington, DC.
Powell stressed that Fed policy would depend on upcoming economic numbers, but that the central bank would “certainly raise rates further” if the data continued to be “stronger than expected.”
In recent days, other Fed officials have also pointed to continued strength in the labor market as a reason the central bank continues to tighten.
“That will probably mean we have to do a little more work,” Atlanta Fed President Raphael Bostic told Bloomberg News. “And I would expect that to translate into a bigger increase in interest rates than I’ve forecast at this time.”
