Powell signals more hikes ahead if US economy stays strong

WASHINGTON (AP) — Federal Reserve Chairman Jerome Powell today signaled he expects the Fed to continue gradually raising interest rates if the U.S. economic expansion remains strong.

Powell added while annual inflation has risen to near the Fed's 2 percent target rate, it doesn't seem likely to accelerate above that point. That suggests he doesn't foresee a need for the Fed to step up its rate hikes. Next month, the Fed is widely expected to resume raising rates.

Speaking to an annual conference of central bankers in Jackson Hole, Wyo., Powell said the Fed recognizes the need to strike a careful balance between its mandates of maximizing employment and keeping price increases stable.

He said a gradual approach to rate hikes is the best way to navigate between the risks of raising rates too fast and "needlessly shortening the expansion" and moving too slowly and risking an overheated economy.

"My colleagues and I," the Fed chairman said in his speech, "are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent."

Powell sketched a positive picture of the U.S. economy and said the Fed's incremental approach to raising rates has so far succeeded.

"The economy is strong," he said. "Inflation is near our 2 percent objective and most people who want a job are finding one. We are setting policy to do what monetary policy can do to support continued growth, a strong labor market and inflation near 2 percent."

At the same time, Powell said that in case of another financial crisis or intensified concern about high inflation, "We will do whatever it takes." That echoed a phrase that was used to describe the extraordinary steps the Fed and other central banks took after the 2008 financial crisis plunged the U.S. and global economies into deep recessions.