Federal Reserve Chairman Jerome Powell suggested Friday that the central bank will continue raising its interest rate target if the economy holds up, signaling that he won’t be deterred by President Trump’s admonishments.
“If the strong growth in income and jobs continues, further gradual increases in the target range for [short-term interest rates] will likely be appropriate,” Powell said in remarks prepared for delivery at a monetary policy conference in Jackson Hole, Wyo.
Powell has kept the Fed on course to slowly raise interest rates this year and next, gradually reversing the central bank’s crisis-era emergency policies.
But he’s run into resistance from Trump. Trump favors lower rates and cheap credit to bolster the stimulative effect of his tax cuts and to keep the dollar weaker to boost exports.
“I’m not thrilled with his raising of interest rates, no. I’m not thrilled,” Trump said in an interview Monday with Reuters. Trump added that he should get “some help” from the Fed as he negotiates trade deals.
Powell did not mention Trump or the controversy in his speech. He also steered clear of any reference to the administration’s trade negotiations.
He did, though, address the perceived risks involved in Fed moving too slowly to tighten money.
Powell said that there appear to be few signs of inflation rising out of control. And he added that if inflation does take off, or financial bubbles appear, the Fed will “do whatever it takes” to fix the problem.
Investors expect two more quarter-percentage point rate increases this year, bringing the target to as high as 2.5 percent. The Fed has already raised rates twice since Powell took office in February.
