Fed: More rate hikes needed to curb inflation
The Federal Reserve said that further interest-rate hikes would be required to restore price stability.
“The committee is strongly committed to returning inflation to its 2% objective,” the Fed said in its semiannual report to Congress released Friday. Officials expect that “ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive.”
The Fed report, which provides lawmakers with an update on economic and financial developments and monetary policy, was published on the central bank’s website ahead of Chair Jerome Powell’s testimony before the Senate Banking panel on
Tuesday and the House Financial Services Committee a day later.
U.S. central bankers are waging their most aggressive action against high inflation in a generation. Officials lifted their benchmark lending rate by a quarter of a percentage point at the start of February, bringing the target to a range of 4.5% to 4.75%.
That was a step down from the half percentage-point increase at their December meeting, which followed four consecutive jumbo-sized 75 basis-point hikes.
The report included several studies highlighting special topics including a dive into why the labor-force recovery has been so slow.
“More than half of that labor-force shortfall reflects a lower labor-force participation rate because of a wave of retirements beyond what would have been expected given demographic trends,” the report noted. “The remaining shortfall is attributable to slower population growth, which in turn reflects both the higher mortality primarily due to COVID-19 and lower rates of immigration in the first two years of the pandemic.”