Powell: Fed could keep lifting rates sharply 'for some time'

JACKSON HOLE, Wyoming (AP) — Federal Reserve Chair Jerome Powell delivered a stark message Friday: The Fed will likely impose more large interest rate hikes in coming months and is resolutely focused on taming the highest inflation in four decades.

Powell also warned more explicitly than he has in the past that the Fed's continued tightening of credit will cause pain for many households and businesses as its higher rates further slow the economy and potentially lead to job losses.

“These are the unfortunate costs of reducing inflation,” he said in a high-profile speech at the Fed's annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.”

Investors had been hoping for a signal that the Fed might soon moderate its rate increases later this year if inflation were to show further signs of easing. But the Fed chair indicated that that time may not be near.

After hiking its key short term rate by three-quarters of a point at each of its past two meetings — part of the Fed's fastest series of rate increases since the early 1980s — Powell said the Fed might ease up on that pace “at some point” — suggesting that any such slowing isn't near.

Powell said the size of the Fed’s rate increase at its next meeting in late September — whether one-half or three-quarters of a percentage point — will depend on inflation and jobs data. An increase of either size, though, would exceed the Fed’s traditional quarter-point hike, a reflection of how severe inflation has become.

The Fed chair said that while lower inflation readings that have been reported for July have been “welcome,” “a single month’s improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down.”

He noted...