Federal Reserve Chairman Jerome Powell said gradual interest-rate hikes are appropriate for the US economy.
Powell believes that the balanced approach of the Federal Open Market Committee (FOMC) has made a significant contribution to strengthening the economy. Going slow on rate hikes has also reduced the risk of “an unforeseen blow to the economy” that might have pushed the economy into recession, the Fed chairman noted.
The Fed has raised interest rates five times since December 2015. The last hike was in March. Currently, the federal funds rate is at a 1.5-1.75% target range. The Fed is expected to further raise rates twice this year. Meanwhile, economists do not rule out three more hikes in order to curb inflation and prevent the economy from overheating.
As for the US labor market, it gained 103,000 new jobs in March. Meanwhile, wage growth was 2.7%. A gradual increase in interest rates is also backed by Charles Evans, president of the Federal Reserve Bank of Chicago. He said is optimistic that inflation will reach the Fed's 2% goal and that gradual rate hikes will be appropriate.
