During a House committee hearing on Wednesday, Chair Jerome Powell informed officials that inflation in the United States remains at elevated levels.

Consequently, the majority of Federal Reserve officials anticipate further interest rate increases later this year. Powell emphasized that the process of reducing inflation to the target rate of 2% is still a lengthy one.

Despite these concerns, the Federal Reserve opted to keep interest rates unchanged last week, following a series of ten consecutive rate hikes, the Associated Press has reported.

This decision was made to allow sufficient time to assess the impact of higher borrowing rates on the economy, according to Powell.

The apparent contradiction between the Fed’s expressed worry about persistent inflation and its choice to forgo a rate hike has raised uncertainties about its future actions.

This ambiguous messaging suggests that Powell is striving to strike a balance between the differing views within the Federal Reserve, with some officials advocating for further rate increases while others believe that the central bank has already taken adequate measures.

Written by staff