Fed's Jerome Powell says strong economy could require rate hikes: 'Inflation is still too high'

Published

2 years ago

October 25, 2023

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The US economy’s strength and continued tight labor markets could warrant further Federal Reserve interest rate increases, Fed Chair Jerome Powell said on Thursday in remarks that appeared to push back against market expectations that the central bank’s rate hikes had reached an end.

“We are attentive to recent data showing the resilience of economic growth and demand for labor. Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell said in remarks to the Economic Club of New York.

For inflation to durably return to the Fed’s 2% target, it “is likely to require a period of below-trend growth and some further softening in labor market conditions,” Powell said.

Since the Fed began raising interest rates in March of 2022 the unemployment rate has varied little from the current 3.8%, below the level most Fed officials feel is noninflationary, and overall economic growth has generally remained above the 1.8% annual growth rate Fed officials see as the economy’s underlying potential.

The Fed is “proceeding carefully” in evaluating the need for any further rate increases, Powell said, likely leaving intact current expectations that the Fed will leave its benchmark policy rate steady at the current 5.25% to 5.5% range at the upcoming Oct. 31-Nov. 1 meeting.

There is evidence the labor market is cooling, Powell said, with some important measures approaching levels seen even before the pandemic.

Powell also noted a number of fresh “uncertainties and risks” that need to be accounted for as the Fed tries to balance the threat of allowing inflation to rekindle against the threat of leaning on the economy more than is necessary.

Those include new geopolitical risks to the economy from the “horrifying” attack on Israel by the Palestinian militant Hamas group, Powell said.

“Our institutional role at the Federal Reserve is to monitor these developments for their economic implications, which remain highly uncertain,” Powell said. “Speaking for myself, I found the attack on Israel horrifying, as is the prospect for more loss of innocent lives.”

He also noted recent market-driven increases in bond yields that have helped to “significantly” tighten overall financial conditions.

“Persistent changes in financial conditions can have implications for the path of monetary policy,” Powell said, with higher market-based interest rates, if sustained, doing the same job as Fed rate increases.

But the Fed chair also voiced what has become a lingering theme at the central bank: That despite steady progress on lowering inflation, the battle isn’t over, with further rate increases still a possibility and the duration of tight monetary conditions still to be determined.

“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said, citing the progress made since inflation peaked last year but also noting that one of the Fed’s main measures of inflation remained at 3.7% through September, nearly twice the central bank’s target.

“We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters,” Powell said. “The path is likely to be bumpy and take some time…My colleagues and I are united in our commitment to bringing inflation down sustainably to 2%.”

The weeks since the Fed’s September meeting have been unusually turbulent, with worries about regional war in the Middle East rising and bond markets driving market interest rates higher, tightening the financial conditions faced by businesses and households somewhat independent of the Fed.

Data since the Fed’s last meeting also has shown US job growth reaccelerating unexpectedly, retail sales defying predictions of a slowdown and varying measures of prices offering inconsistent signals about whether inflation is on track to return to the Fed’s 2% target in a timely manner.

Powell’s appearance comes less than 48 hours before the beginning of the traditional quiet period ahead of the rate-setting Federal Open Market Committee’s meeting on Oct. 31-Nov. 1. While a handful of other Fed officials have appearances later on Thursday and Friday before blackout begins on Saturday, it is Powell’s remarks that will set the tone for policy expectations heading into that meeting.

Should they leave rates unchanged in two weeks as is now widely expected, it would mark the first back-to-back meetings with no rate increase since the Fed kicked off its hiking campaign in March 2022.

A Reuters poll of more than 100 economists published on Wednesday showed more than 80% expect no rate hike at the next meeting, and most also believe the Fed is done with rate hikes even though a majority of policymakers at their September meeting projected one more quarter-point increase was likely to be needed by year end.

Many in the poll offered the caveat that if progress on inflation stalls out or reverses, the Fed would not hesitate to resume raising rates.

Sports

Panthers’ Ekblad suspended 2 games for Hagel hit

Published

1 hour ago

April 30, 2025

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Panthers' Ekblad suspended 2 games for Hagel hit

Associated Press

Apr 29, 2025, 07:28 PM ET

NEW YORK — Panthers defenseman Aaron Ekblad has been suspended for two games for elbowing Lightning forward Brandon Hagel in the head midway through Game 4 of Florida’s first-round series against Tampa Bay.

The NHL’s Department of Player Safety announced its ruling after a phone hearing with Ekblad earlier Tuesday. He will be out for Game 5 and either Game 6 of this series or the Panthers’ first game in the next round.

No penalty was called when Ekblad hit Hagel in the chin with his right elbow and forearm with just under nine minutes left in the second period on Monday night. Hagel left the ice and did not return, and Ekblad scored the first of two goals in 11 seconds late in the third to give the defending Stanley Cup champions a comeback victory and a 3-1 series lead.

Coach Jon Cooper said Hagel would not play in Game 5. Hagel was suspended for Game 3 for his late hit that knocked Panthers captain Aleksander Barkov out of Game 2.

Ekblad missed the first two games of the playoffs and the final 18 of the regular season after being suspended for violating the league and NHLPA’s performance-enhancing drug policy. Florida got accustomed to playing without Ekblad.

“If it’s the first time it happens, there’s even questions from the coaching staff about what’s the right adjustment to make in your lineup and how will that play out — there’s a lot of unknown,” Panthers coach Paul Maurice said. “Because we’ve been through it so much when Aaron’s out, we know what the D-pairs are — let’s assume — if he’s out of the lineup.”

Another Florida defenseman, Niko Mikkola, was fined $5,000 for boarding Tampa Bay’s Zemgus Girgensons. Mikkola was given a five-minute major and ejected for the play early in the third period of Game 4.

Sports

Tocchet quits; Canucks 8th team seeking a coach

Published

1 hour ago

April 30, 2025

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Tocchet quits; Canucks 8th team seeking a coach

Ryan S. ClarkApr 29, 2025, 05:05 PM ET
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Add Rick Tocchet to the list of available coaching options on the open market with the Vancouver Canucks announcing Tuesday that Tocchet left the team.

There had been a belief that Tocchet’s time with the Canucks could be coming to an end. Last week saw the discussion of Tocchet’s future with the franchise come under greater focus, with Canucks president of hockey operations Jim Rutherford saying they weren’t exercising their option on Tocchet’s contract before adding that they offered him a new, more lucrative deal to remain in Vancouver.

But now? Tocchet joins the list of sought-after coaching candidates and the Canucks become the eighth NHL team that will use this offseason to go through a coaching search.

“After a very long and thorough process, unfortunately Rick has decided to leave the Vancouver Canucks,” Rutherford said in a statement. “This is very disappointing news, but we respect Rick’s decision to move to a new chapter in his hockey career. We did everything in our power to keep him but at the end of the day, Rick felt he needed a change.”

In the same news conference in which Rutherford said the team offered Tocchet a new deal, he also said that Tocchet “may have his mind somewhere else” before adding that he felt Tocchet and his staff did “a good job coaching this team this year” as they did in their first full campaign.

Tocchet was a midseason hire during the 2022-23 season. His first full year in charge saw the Canucks win 50 games, finish with 109 points and win the Pacific Division. He led the Canucks to their first postseason appearance since the 2019-20 season and was a win away from advancing to the Western Conference finals.

Entering this season, the Canucks had most of their players from their playoff team. They started strong with a 15-8-5 record but encountered numerous on-ice and off-ice problems that would prove too large.

Among them was the friction between star forwards J.T. Miller and Elias Pettersson. The tension between Miller and Pettersson reached a stage in which Canucks captain Quinn Hughes publicly acknowledged there was an issue with Miller and Pettersson denying such issues.

Miller would be traded to the New York Rangers before the trade deadline, and the Canucks struggled to find someone who could replace his production. They would finish six points behind the St. Louis Blues for the final Western Conference wild-card spot.

Still, Tocchet had the support of Hughes, along with others within the organization who wanted him to stay.

As for what it all means going forward for both parties? Tocchet is among those who will join Mike Sullivan, who parted ways with the Pittsburgh Penguins on Monday after winning two Stanley Cups in 10 seasons, as one of the most attractive names for teams seeking a new bench boss.

Then there are the teams that need a coach. It’s a list that includes the Anaheim Ducks, Boston Bruins, Chicago Blackhawks, Rangers, Philadelphia Flyers, Seattle Kraken, plus the Penguins and now the Canucks.

“I’m choosing to move on from the Vancouver Canucks,” Tocchet said. “Family is a priority, and with my contract lapsing, this becomes an opportune time. While I don’t know where I’m headed, or exactly how this will play out for me over the near term, I feel like this is the right time for me to explore other opportunities around hockey.”

Politics

Crush fly-tippers’ vans, government tells councils

Published

1 hour ago

April 30, 2025

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Crush fly-tippers' vans, government tells councils

The government wants councils to crush more vans used to fly-tip rubbish, as it announces a crackdown on the illegal dumping of waste.

No new funding is being given to local authorities for the initiatives, with ministers saying the seven percent raise announced in the budget can be used.

As part of the announcement, the government has also proposed that fly-tippers could face up to five years in prison, although this would require a change in the law.

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Environment Secretary Steve Reed said: “Councils will get much more aggressive against fly-tippers and that includes using the latest technology, things like the new mobile CCTV cameras and drones to identify, track and then seize the vehicles that are being used for fly-tipping to a yard like this and crush them.

“That’s both as a punishment for those people who are dumping the rubbish but also as a deterrent for those who are thinking about doing it.”

He added: “We’re also looking to change the law so that those rogue operators who take rubbish from someone’s home and then dump it on a nearby road – they were getting away almost scot-free under the previous government – they will now be looking at potentially five-year prison sentences.”

The minister claimed the fly-tipping was “out of control” under the last government.

Data from the Department for Environment, Food and Rural Affairs (DEFRA) shows local authorities in England dealt with a record 1.15 million incidents last year – a 20% increase from 2018/19.

Environment Agency chief executive Philip Duffy said: “We’re determined to bring these criminals to justice through tough enforcement action and prosecutions.

“That’s why we support the government’s crackdown on waste criminals, which will ensure we have the right powers to shut rogue operators out of the waste industry.”

However, the Conservatives claimed that rubbish is “piling high” in areas like Birmingham as refuse workers strike against a pay and jobs offer from the Labour-run council.

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Shadow environment secretary Victoria Atkins said: “Wherever Labour is in charge, waste is piling high – like in Birmingham, where Labour’s inability to stand up to their union paymasters has left rat-infested rubbish littered across the street.

“And with statistics showing that of the 50 worst local areas for fly-tipping, 72% are Labour controlled, it is clear that voting Labour gets you rubbish and rats.

“So the British public deserve real action, not this series of reheated announcements and policies already introduced by previous governments that Labour is peddling.”

Liberal Democrat deputy leader Daisy Cooper said: “Under the Conservatives’ watch, local communities have been plagued by a fly-tipping epidemic.

“From overflowing bins to piles of hazardous waste, fly-tipping is blighting our landscapes, poisoning livestock on farming land and causing misery for residents.

“Enough is enough.

“The Liberal Democrats are calling for a fly-tipping fighting fund, to push for stronger local enforcement and tougher penalties for offenders.”