US Fed to continue raising rates until signs of slowing inflation

US Federal Reserve headquarters

Federal Reserve Chairman Jerome Powell confirmed the central bank's determination to continue its efforts to contain inflation, noting that the US economy will not be "in anyone's interest" unless prices stabilize.

In his prepared testimony before the Senate Banking Committee on March 7, Powell appeared open to the possibility of accelerating monetary tightening, if necessary, in order to stabilize prices.

"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," Powell said.

He added that the subdued inflation trajectory "reversed" in January, and there were few signs of moderation in inflation in the basic services category, excluding housing.

He continued, "However, this reversal, together with the previous quarter's revisions, suggests that inflationary pressures are running higher than expected at the time of our previous meeting."

The Fed chairman added that the process of getting inflation back to the central bank's target of 2% would be a long and potentially "bumpy" road.

Powell said that the economic data had become stronger than expected, and this means that "the final level of interest rates is likely to be higher than expected."

The markets now estimate that the Fed will raise the interest rate to between 5.5% and 5.75% by September, after four equal increases of 25 basis points.