Powell: Fed 'Strongly Committed' To Bringing Inflation Back Down To 2%

(RTTNews) - On the heels of last week's significant interest rate increase, Federal Reserve Chair Jerome Powell appeared before the Senate Banking Committee on Wednesday to deliver his semiannual monetary policy testimony.

Powell began his prepared remarks by highlighting the Fed's strong commitment to bringing inflation back down to the central bank's longer-run goal of 2 percent.

"At the Fed, we understand the hardship high inflation is causing," Powell said. "We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so."

"We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses," he added. "It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all."

Discussing the Fed's efforts to fight elevated inflation, Powell noted the central bank has raised interest rates from near-zero levels to 1.50 to 1.75 percent over the past three meetings.

Powell reiterated the Fed anticipates ongoing rate increases will be appropriate, with the pace of the rate hikes dependent on incoming data and the evolving outlook for the economy.

"We will make our decisions meeting by meeting, and we will continue to communicate our thinking as clearly as possible," Powell said. "Our overarching focus is using our tools to bring inflation back down to our 2 percent goal and to keep longer-term inflation expectations well anchored."

Despite concerns about higher rates tipping the economy into a recession, Powell argued the U.S. economy is very strong and well positioned to handle tighter monetary policy.

The Fed Chief said the central bank will still strive to "avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time."

With regard to the current economic situation, Powell acknowledged that economic activity edged down in the first quarter but said recent indicators suggest that real gross domestic product growth has picked up in the current quarter.

The Fed's next monetary policy meeting is scheduled for July 26-27, with CME Group's FedWatch Tool currently indicating an 88.5 percent chance of another 75 basis point rate hike.