Powell says Fed will keep raising interest rates as long as appropriate

(CBS) — Federal Reserve Chair Jerome Powell on Wednesday said the Fed will continue to raise interest rates in an effort to combat inflation as Americans across the country feel the burden of the fastest price increases in 40 years. But the central bank faces a mounting challenge: easing prices without pushing the country into a recession.

“We anticipate that ongoing rate increases will be appropriate. The pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy,” Powell said in testimony at a hearing before the Senate Banking Committee focused on the Fed’s semiannual monetary policy report to Congress. Powell will appear before House lawmakers on Thursday.

His congressional testimony comes less than a week after the Fed announced the largest interest rate hike since 1994 — raising the federal funds rate by 0.75% at its June meeting. It was the third time the Fed hiked rates this year, bringing the federal funds rate to 1.5% so far. Central bank officials project the federal funds rate could be between 3% and 3.5% by the end of the year.

During the hearing, Powell acknowledged that poses a significant hardship for Americans and said there has not been any indication yet that prices are coming down. According to the latest data, prices are up 8.6% from a year ago, rising at the fastest pace since 1982. Not including energy and food prices, which are often volatile, prices are up 6% from a year ago.

But as the Fed moves to combat soaring costs, recession fears loom. During the hearing, Democratic Sen. Jon Tester of Montana asked Powell whether he agrees raising interest rates too high, too quickly could drive the U.S. into a recession.

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