Powell likely to stress Fed's inflation fight far from over

WASHINGTON (AP) — Inflation is cooling, and parts of the economy appear to be weakening. But Chair Jerome Powell is likely Wednesday to underscore that the Federal Reserve's primary focus remains the need to fight surging prices with still-higher interest rates.

With financial markets anticipating that the Fed will stop raising rates soon and possibly even cut them later this year, analysts say Powell will need to push back against such optimism. If financial markets expect lower rates than what the Fed plans to deliver, the central bank's already treacherous task can become even harder.

Powell's tough message will likely emerge at a news conference after the Fed's 19-member policy committee announces its latest action. The policymakers are set to raise their benchmark rate by a quarter-point to a range of 4.5% to 4.75%, its highest level in about 15 years. The move could further increase borrowing rates for consumers as well as companies, ranging from mortgages to auto and business loans.

In some ways, the Fed's challenge is trickier than it was last year, when inflation accelerated much faster than officials had expected. After being caught off guard — Powell had initially characterized high inflation as only a temporary phenomenon — officials developed a clear view of what was needed: An aggressive series of rate hikes to slow borrowing and spending, cool growth and curb high inflation.

Now, though, inflation has weakened since the fall. As a result, the risks that the Fed’s rate hikes could send the economy into a painful recession, with waves of job losses, are rising. Consumer prices, by the Fed's preferred measure, have risen at just a 2.9% annual rate in the past three months. Yet Fed officials have said they would need to see further evidence that inflation was declining closer to its 2% target before they...