Some officials say that Fed should keep raising rates

could still lead a hike, because “the guidance he is offering is limited.”

Officials raised rates by a quarter percentage point this month to a target range of 5 percent to 5.25 percent and signaled they could hold rates steady when they next meet June 13 and 14.

The U.S. central bank has increased interest rates by five percentage points in little more than a year, undertaking its most aggressive tightening campaign in decades to quell high inflation.

Some officials, including governor Michelle Bowman and Cleveland Fed President Loretta Mester, have suggested the Fed should keep raising rates, because they’ve not seen convincing evidence that price pressures are cooling fast enough.

But Powell signaled that he isn’t in that camp, citing headwinds to the economy stemming from the recent collapse of four regional U.S. banks.

“While the financial stability tools helped to calm conditions in the banking sector, developments there on the other hand are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring and inflation,” Powell said. “As a result our policy rate may not need to rise as much as it would have otherwise to achieve our goals. Of course, the extent of that is highly uncertain.”

Policymakers in March projected rates peaking at 5.1 percent according to their median outlook — the level reached earlier this month — though seven other officials forecast they would need to go higher.

With the labor market and economic growth more resilient than many expected and inflation still high, officials could revise up their outlook for rate projections they submit in June.

The conference, held at the Fed’s headquarters in Washington, honors the memory of former Fed economist Thomas Laubach, who died in 2020 at the age of 55.