Jerome Powell warned that the Fed may need to raise interest rates further to cool still-too-high inflation. The Fed's goal is to reduce inflation to 2 percent.

After Powell's speech, the probability of a 25 basis point interest rate hike in September more than doubled to 21.5%. The probability of an additional interest rate increase this year reached its highest level in the last two months with 52.1 percent. Rate cuts are not expected to start until June 2024 at the earliest.