Fed Reserve Signals Potential Rate Hikes as It Aims to Tame Inflation
Latest data suggests inflation slowdown, but further action may be needed to ensure stability
The Federal Reserve has signaled its readiness to raise interest rates further, if necessary, to steer inflation towards its 2 percent goal. While the recent trend indicates a gradual decline in inflation rates, the Federal Reserve intends to maintain a restrictive policy stance until it's confident about a sustained reduction in inflation levels, Governor Jerome Powell said in an address.
Inflation's Recent Decline
Powell was speaking at the economic policy symposium “Structural Shifts in the Global Economy,” sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming.
While inflation has begun to taper, the decline hasn't been as rapid as desired. As of July, the headline PCE (personal consumption expenditures) inflation dropped to 3.3 percent, having peaked at 7 percent in June 2022, Powell said. Notably, inflationary effects globally have been influenced primarily by the Russia-Ukraine war since early 2022. However, when taking out the volatile food and energy components, core PCE inflation sat at 4.3 percent in July, having reduced from its peak of 5.4 percent in February 2022.
