Fed Chairman Powell said at a Senate hearing that the Fed is prepared to raise rates faster if data allow. The Fed's rate hikes are slowing demand in interest rate sensitive sectors. Inflation has eased, but the decline may be bumpy. It will take time for the policy to have a full impact. The labor market remains extremely tight. It may be appropriate to continue to raise the policy rate so that the stance is tight enough to get inflation back to 2% over time.
Powell said the extent of revisions to previous quarters suggests inflation may be higher than expected. The latest economic data was stronger than expected. History warns against easing policy too early. The final interest rate level may be higher than expected. To get inflation back to 2%, inflation in core services (excluding housing) will need to fall, and there will likely need to be some slack in the labor market. (PANews)
