Chairman Powell: Fed is in no hurry to raise interest rates

Chairman of the Federal Reserve Jerome Powell. PHOTO CREDIT: Susan Walsh

WASHINGTON — Federal Reserve Chairman Jerome Powell told Congress today that the central bank will not begin raising interest rates until it believes it has reached its goals on maximum employment and inflation.

Powell also warned that many who had worked in industries hardest hit by the pandemic and ensuing recession will likely need to find different jobs.

As he did before the Senate Banking Committee on Tuesday, Powell told the House Financial Services Committee that the Fed was in no hurry to raise benchmark short-term interest rates or to begin trimming its $120 billion in monthly bond payments used to put downward pressure on longer-term rates.

Financial markets, which had begun to wane Tuesday on fears that higher inflation might trigger an earlier-than-expected tightening of credit conditions by the Fed, rebounded on Powell’s comments.

That trend continued today with the Dow rising more than 300 points, or just over 1%.

Powell said the Fed did not see any indication that inflation could race out of control. While price increases might accelerate in coming months, Powell said those increases were expected to be temporary and not a sign of long-run inflation threats.