Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year, Fed Chair Powell reinforced in prepared remarks for the Semiannual Monetary Policy Report to Congress. The Fed will continue to make decisions meeting by meeting, based on the totality of incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks, Powell added. “Earlier in the process, speed was very important,” but “It is not very important now.” At the same time, inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go and will take time for the full effects of monetary restraint to be realized. The Fed left the target for the funds rate unchanged at 5%-5.25% in June but signaled rates may go to 5.6% by year-end if the economy and inflation do not slow down more.
