Powell Targets High-or-Higher Rate Path as Economy Picks Up

In a hotly anticipated speech Friday at the US central bank’s annual conference in Jackson Hole, Wyoming, Powell stressed that the Fed’s inflation-fighting job isn’t done while noting progress in slowing price gains.

“They haven’t seen the economy slow as much as they’d like, or the labor market slow as much as they’d like,” said William English, a professor at the Yale School of Management and a former advisor to Fed officials on policy strategy. While Fed officials differ over whether further tightening is needed, they’re voicing similar sentiment on the need to at least keep rates elevated.“Under-tightening would be a worse mistake than over tightening a little bit because we can course-correct that,” Cleveland Fed President Loretta Mester said in an interview on Bloomberg Television on Friday following Powell’s speech.

“In such circumstances, risk-management considerations are critical,” he said. “We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.” “Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell said. “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.”

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