WASHINGTON — Federal Reserve Chair Jerome Powell said Tuesday that if the job market further strengthens in the coming months or inflation readings accelerate, the Fed might have to raise its benchmark interest rate higher than it now projects.
Powell’s remarks followed the government’s blockbuster report last week that employers added 517,000 jobs in January, almost double the previous month’s total. The unemployment rate fell to its lowest level in 53 years, 3.4 percent.
“The reality is if we continue to get strong labor market reports or higher inflation reports, it might be the case that we have to raise rates more” than is now expected,” Powell said in remarks to the Economic Club of Washington.
Though price pressures are easing and Powell said he envisions a “significant” decline in inflation this year, he cautioned that “these are the very early stages of disinflation. It has a long way to go.”