UPDATES WITH POWELL'S REMARKS
By Ovunc Kutlu
ISTANBUL (AA) - US Federal Reserve Chair Jerome Powell on Friday said inflation remains too high and the central bank is prepared to raise interest rates further.
"We intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down to our objective," he said in his speech at the annual three-day Jackson Hole symposium in the US state of Wyoming.
"In the upcoming meetings, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks," he added.
Powell said high inflation is a result of "very strong demand" and "pandemic-constraint" supply.
"Process of bringing down inflation still has "a long way to go" even with the more favorable recent macroeconomic reading," he said.
The Fed, since March 2022, has undertaken one of the most aggressive monetary tightening in history to fight record inflation, which soared to a four-decade high of 9.1% in June 2022.
The bank raised interest rates by a total of 425 points in seven hikes last year, which were followed by 25 basis points apiece on Feb. 1, March 22, May 3, and most recently July 26.
Powell noted that core PCE inflation peaked at 5.4% in February on a 12-month basis and declined gradually to 4.3% in July this year.
Although the core inflation monthly reading in June and July were welcomed, "two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably" towards the Fed's goal of 2%, according to the Fed chair.
"We can't yet know the extent to which these lower reading will continue, where the underlying inflation will settle over the coming quarters. The 12-month inflation is still elevated and there is substantial further ground to cover to get back to price stability," he explained.
The chair said prices for goods, housing services and all other services are the main contributors to high core PCE inflation.
Although the core inflation for durable goods has fallen sharply, especially in the last two months, he stressed that on a 12-month basis core goods inflation remains well above its pre-pandemic level.
"Sustained progress is needed and restrictive monetary policy is called for to achieve that progress," he added.