by Howard Schneider and Ann Saphir
WASHINGTON (Reuters) – Further U.S. interest rate hikes are likely to be needed despite their potential impact on jobs, U.S. Federal Reserve Chairman Jerome Powell said on Thursday.
Speaking before the US Senate Banking Committee the day after a hearing before the House Financial Services Committee, Jerome Powell defended the continuation of the monetary tightening policy started in March 2022 by the American bank
He was notably questioned by Democratic Senator from Ohio, Sherrod Brown, chairman of this Senate committee, on the fact that the Fed’s efforts to control inflation will likely lead to a disproportionate loss of jobs among racial minorities. and ethnic.
“What Fed governors call ‘chilling’ (the economy), ordinary people where I live call it layoffs,” Sherrod Brown said.
“It is working families who suffer most directly and most quickly from inflation,” replied Jerome Powell, adding that Fed officials believe at this stage “it will be appropriate to raise rates again. this year, and possibly twice, assuming the economy behaves as expected.”
On Wednesday, the Fed boss had already stressed that the central bank still had “a long way to go” to bring inflation back to the 2% target.
Jerome Powell also provided insight into the Fed’s approach for the coming months as bank officials debate the scale of the rate hike.
“We moved very, very quickly when we had to,” he said, recalling that rates have risen 75 basis points in some of the Fed’s previous meetings.
But now “we are at least close to where we think our destination should be (…) and it makes sense to move forward (…) at a cautious pace,” he said. The Fed opted for the status quo on rates this month.
“We don’t want to do more than we have to do,” said Jerome Powell.
“The overwhelming majority of the (Federal Open Market) Committee members think there are more rate hikes coming, but we want to do them at a pace that allows us to see the new (economic) data.” , he added.
(Reporting Howard Schneider; Claude Chendjou, editing by Kate Entringer)
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