US Fed 'prepared to raise rates further' on too-high inflation

WASHINGTON - The US Federal Reserve is prepared to raise interest rates higher -- and hold them there -- to "sustainably" bring down above-target inflation, chairman Jerome Powell said Friday.

However, the rapid cycle of interest rate increases has failed to definitively quash inflation, which remains stuck above the Fed's long-term target of two percent, despite slowing sharply from recent multi-decade highs. "We will need price stability to achieve a sustained period of strong labor market conditions that benefit all," he said.Analysts and policymakers remained split ahead of Powell's speech on the likelihood of a 12th hike to tackle inflation at the Fed's next rate-setting meeting in September.

The Fed estimates that annual PCE in July rose to an annual rate of 3.3 percent from 3.0 percent a month earlier. Inflation excluding volatile food and energy prices also increased.Futures traders currently assign a probability of close to 85 percent that the Fed will vote to pause rates at the next Federal Open Market Committee meeting on September 19-20, according to data from CME Group.

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