Jerome Powell, chair of the Board of Governors of the Federal Reserve System, said inflation has started to ease but the process would take time and warned that the Fed could continue to raise interest rates in response to unfavorable economic data, CNBC reported Tuesday.
“The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy,” Powell said Tuesday during an event in Washington, D.C. “But it has a long way to go. These are the very early stages.”
He noted that the Fed will likely increase rates if data shows higher inflation.
“The reality is we’re going to react to the data,” Powell said. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in.”
On Feb. 1, the Fed voted unanimously to raise the interest rate by 0.25 of a percentage point to 4.5 percent to 4.75 percent. This marks the eighth increase in rates since March 2022, according to the report.