The Federal Reserve will likely raise interest rates at least two more times this year, Chair Jerome Powell said June 29.
Powell’s comments came one week after he testified before the Senate Banking Committee that the Federal Reserve Open Market Committee will likely only begin reducing interest rates after inflation starts moving closer to the Fed’s long-term 2 percent target, likely not until late 2024.
Last month, the Fed paused its benchmark federal funds rate at a range of 5 to 5.25 percent, its first pause in 15 months. The FOMC has already raised interest rates by 75 basis points this year, and offloaded approximately $420 billion of Treasury and agency mortgage-backed securities.
As reported by the Associated Press, Powell said in a recent news conference that there is no timeframe on when the FOMC will once again raise interest rates. During his Senate testimony, Powell said those decisions will be made based on current economic conditions. Unemployment remains under 4 percent, and there remains a surplus of jobs.
“The labor market remains very tight,” Powell said. “Over the past three years, payroll job gains have been robust. The unemployment rate has moved up but remains low. There are some signs that supply and demand in the labor market are coming into better balance, including higher labor force participation, some easing in nominal wage growth, and declining vacancies.”
Powell said cutting inflation can happen without significantly increasing unemployment.
“Despite elevated inflation, longer-term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses and forecasters, as well as measures from financial markets,” Powell said.