Federal Reserve chairman Jerome Powell warned on Tuesday that interest rates may be pushed higher than previously expected in order to curb stubborn inflation.
Federal Reserve Chair Jerome Powell testifies before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill in Washington, D.C., on Tuesday. Powell warned the fight against inflation still has"a long way to go," sending stock markets lower.Federal Reserve Chair Jerome Powell testifies before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill in Washington, D.C., on Tuesday.
"Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy," Powell told senators.Over the last year, the central bank has raised interest rates eight times in an effort to tamp down demand. But after appearing to cool off late last year, both consumer spending and hiring came roaring back in January, putting more upward pressure on prices.
Higher rates should help curb inflation. But the Fed's actions also risk sparking a recession and a rise in unemployment.Traders work on the floor of the New York Stock Exchange in New York City as Powell testifies before the Senate Banking Committee on Tuesday. Stocks tumbled after Powell suggested the Fed may need to raise interest rates more aggressively to bring down inflation.
"You are gambling with people's lives," she said."You cling to the idea that there's only one solution: Lay of millions of workers. We need a Fed that will fight for families."
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