WASHINGTON — Hot inflation data could lead the Federal Reserve to raise interest rates to higher levels and at an accelerated pace, Federal Reserve Chairman Jerome Powell told the Senate Banking Committee on Tuesday.
“Although inflation has been moderating in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy,” Powell said in his opening statement. “As I mentioned, 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. 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.”
Powell said that some consumer spending in January may have been higher because of relatively warm weather, but “the breadth of the reversal, along with revisions to the previous quarter, suggests that inflationary pressures are running higher than expected at the time of our previous (Federal Open Market Committee) meeting.”
