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Federal Reserve to Keep Hiking Interest Rates as US Economy Not Cooling - Chairman

© SAUL LOEBIn this file photo taken on June 22, 2021 Federal Reserve Board Chairman Jerome Powell testifies on the Federal Reserve's response to the coronavirus pandemic during a House Oversight and Reform Select Subcommittee hearing on Capitol Hill in Washington, DC.
In this file photo taken on June 22, 2021 Federal Reserve Board Chairman Jerome Powell testifies on the Federal Reserve's response to the coronavirus pandemic during a House Oversight and Reform Select Subcommittee hearing on Capitol Hill in Washington, DC.  - Sputnik International, 1920, 25.08.2023
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WASHINGTON (Sputnik) - The Federal Reserve will keep raising interest rates as long as it is needed to bring inflation back to its long-term target of 2% per year given that the US economy is not cooling as was initially thought, Chairman Jerome Powell said on Friday.
"It is the Fed's job to bring inflation down to our 2% goal, and we will do so," Powell stressed, opening the US central bank’s annual symposium in Jackson Hole, Wyoming.
The symposium is said to be one of the most-watched events for clues on decisions concerning the US interest rates.
Powell stated that the Fed is "prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective."
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Fed Raises Rates to 22-Year High
Inflation hit four-decade highs of more than 9% per year in June 2022 due to trillions of dollars of federal relief spending following the 2020 coronavirus outbreak. The Fed responded with its most aggressive interest rate hikes in 20 years, going from a base rate of just 0.25% in March 2022 to 5.5%.
While pandemic-related spending has ended and price growth has since stabilized at 3% per year, a robust labor market has allowed Americans to continue spending, preventing the Fed from achieving its target for inflation.
Weekly jobless claims have continued to decline in the United States, with unemployment hitting more than 50-year lows, while average hourly earnings have not contracted in a single month since April 2021.
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"We are attentive to signs that the economy may not be cooling as expected," Powell said, adding that the second quarter GDP growth of 2.4% was well beyond the 2% expansion in the first quarter and 2.1% for all of 2022.

"Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy," Powell specified.

Despite the tough talk, the Fed has maintained that its rate decisions will be driven by data.
The US central bank’s policy-makers, led by Powell, will make their next decision on interest rates on September 20 and the indication thus far is that the central bank will skip a rate hike for a second time in three months due to mixed economic data.

"Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks," Powell explained, underscoring the economists’ concerns. "At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks. Based on this assessment, we will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data," the offcial emphasized.

FILE- In this Nov. 15, 2017, file photo, a worker aerates printed sheets of dollar bills at the Bureau of Engraving and Printing in Washington.  - Sputnik International, 1920, 24.08.2023
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Fed Official Warns More US Interest Rate Hikes May Be Coming
While most money market traders expect a pause at the Fed’s September 20 decision on interest rates, there is still a 43% probability among them that the central bank will opt for an increase at its November policy meeting.
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