Powell says Federal Reserve to keep rates higher for longer to cut inflation

WASHINGTON (AP) — The Federal Reserve will push rates higher than previously expected and keep them there for an extended period, Chair Jerome Powell said Wednesday in remarks likely intended to underscore the Fed's singleminded focus on combating stubborn inflation.

Yet in a speech at the Brookings Institution, Powell also signaled that the Fed may increase its key interest rate by a half-point at its December meeting, a smaller boost after four straight three-quarter point hikes. Rate increases could then fall to a more traditional quarterpoint size at its February and March meetings, based on previous Fed forecasts.

Powell said the Fed is seeking to increase its benchmark rate by enough to slow the economy, hiring, and wage growth, but not so much as to send the U.S. into recession.

It has lifted the rate six times this year to a range of 3.75% to 4%, the highest in 15 years. Those increases have sharply boosted mortgage rates, causing home sales to plunge, while also raising costs for most other consumer and business loans.

"We think that slowing down at this point is a good way to balance the risks," Powell said. "The time for moderating the pace of rate increases may come as soon as the December meeting," which will take place Dec. 13-14.

Financial markets rallied in response to Powell's suggestion that rate increases will slow. The S&P 500 jumped 122 points, or 3.1%. It had fallen before Powell spoke.

But Powell also stressed that smaller hikes shouldn't be taken as a sign the Fed will let up on its inflation fight anytime soon.

"It is likely that restoring price stability will require holding (interest rates) at a restrictive level for some time," Powell said. "History cautions strongly against prematurely loosening policy."

Members of the community gathered on the parking lot of the Forrest City Civic Center Thursday afternoon for a prayer vigil led by several members of local churchs. The vigil was held following the recent shooting deaths of youngsters in the community. Faith leaders each chose a topic to pray for the community including peace, love, unity, comfort, forgiveness, the school system and healing. Faith leaders who spoke were Rev. Versie Easter, Pastor Louis Ford, Pastor Charles Miller, Pastor Allen Calvert, Pastor Ronald Williams and Minister DaVida Winfrey. Also speaking were Forrest City Chief of Police and Pastor Ronald Broussard, Pastor Rayfield Walker and Forrest City Mayor Cedric Williams. Lorenzo Billups performed a song between prayers. All faith leaders also provided one-on-one prayers for those in need at the end of the vigil. Arisa Health Services was also present to provide counseling.