Federal Reserve Chair Jerome Powell warned the Fed could accelerate rate hikes if evidence continues to point to a robust economy and persistently high inflation. Powell’s warning came during testimony in front of the Senate Banking Committee on the morning of Mar. 7.
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in his prepared testimony. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
The latest reading of the Fed’s preferred inflation measure showed consumer prices rose from December to January by the most in seven months. Reports on hiring, consumer spending and the broader economy have also indicated that growth remains healthy.
Powell’s warning about rate hikes Tuesday raises the possibility the Fed could hike its key interest rate by 50 basis points at its next meeting, which would follow last month’s 25 basis point increase.
