Powell noted that the economy has been growing faster than expected and that consumers have kept spending briskly — trends that could keep inflation pressures high. He reiterated the U.S. Fed's determination to keep its benchmark rate elevated until inflation is reduced to its two per cent target.
The overall economy has nevertheless powered ahead. Hiring has remained healthy, confounding economists who had forecast that the spike in rates would cause widespread layoffs and a recession. Consumer spending keeps growing at a healthy rate. And the U.S. unemployment rate stands exactly where it did when Powell spoke last year: 3.5 per cent, barely above a half-century low.
The Fed's officials “will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data,” he said. In June, when the Fed’s 18 policymakers last issued their quarterly projections, they predicted that they would raise rates once more this year. That expectation might have changed, though, in light of milder inflation readings the government has issued in recent weeks. The officials will update their interest rate projections when they next meet Sept. 19-20.
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