Further interest rate increases are in the future, according to the chairman of the Federal Reserve.
The economy is running at a fast enough pace that continued rate increases are justified, Fed Chair Jerome Powell said today in remarks to the Senate Banking Committee.
“Overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate,” he said. “The unemployment rate is low and expected to fall further. Americans who want jobs have a good chance of finding them.”
The Fed’s policymaking body, Federal Open Market Committee, has already hiked the benchmark interest rate twice this year, by a quarter-point each time. It’s expected to hike rates twice more before the end of the year, according to a CNBC report.
Powell said that although the economy grew at a pace of just 2% in the first quarter, second-quarter growth was “considerably stronger than the first.”
“Robust job gains, rising after-tax incomes, and optimism among households have lifted consumer spending in recent months,” he said. “Investment by businesses has continued to grow at a healthy rate. Good economic performance in other countries has supported US exports and manufacturing. And while housing construction has not increased this year, it is up noticeably from where it stood a few years ago.”
'Low-for-long' interest rates may make banks vulnerable, central banks find
Fed chair's calendar offers hints about priorities – report