Powell said Fed policymakers would “proceed carefully as we decide whether to tighten further,” but also made clear that the central bank has not yet concluded that its benchmark interest rate is high enough to ensure that inflation returns to the 2% target.
“It is the Fed’s job to bring inflation down to our 2% goal, and we will do so,” Powell said in a keynote address to the Jackson Hole Eco nomic Policy Symposium. “We have tightened policy significantly over the past year. Although inflation has moved down from its peak — a welcome development — it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
In that context, recent da ta has raised a new concern, he said. “We are attentive to signs that the economy may not be cooling as expected,” with consumer spending “especially robust” and the housing sector possibly rebounding, Powell said. The economy continues to grow above trend, he added, and if that continues “it could put further progress on inflation at risk and could warrant further tightening of monetary policy.”