Federal Reserve Chair Jerome Powell said Tuesday that if the U.S. job market further strengthens in the coming months or inflation readings accelerate, the Fed might have to raise its benchmark interest rate higher than it now projects, according to a report from the Associated Press.
Powell’s remarks followed the government’s blockbuster report last week that employers added 517,000 jobs in January, nearly double December’s gain. The unemployment rate fell to its lowest level in 53 years, 3.4%.
Though price pressures are easing and Powell envisions a “significant” decline in inflation this year, he cautioned that so far the central bank is seeing only “the very early stages of disinflation. It has a long way to go.
“There’s been an expectation that it’ll go away quickly and painlessly,” Powell continued. “I don’t think that’s at all guaranteed.”
Instead, he warned that in his estimation, “it will take some time, and we’ll have to do more rate increases and then we’ll have to look around and see if we’ve done enough.”
