The continued strength of the U.S. economy could require further interest rate increases, Federal Reserve Chair Jerome Powell said in a closely watched speech that also highlighted the uncertain nature of the economic outlook.The central bank has already hiked its main interest rate to the highest level since 2001 in its drive to grind down high inflation. That was up from virtually zero early last year.
Wall Street is betting that the Fed will hold rates steady again at its September meeting, according to CME’s FedWatch tool. Bets are nearly evenly split, though, on whether it will raise rates one more time before 2023 closes.Powell on Friday said upcoming decisions will be based on what incoming data reports say about the economy.
Wall Street will get an update on job openings from July on Tuesday and a monthly employment report for August on Friday. The employment market is being closely watched because it has remained strong amid hot inflation and is credited with acting as a bulwark against a recession. Investors and economists will be focusing closely on the government’s latest inflation update on Thursday. The report on personal consumption and expenditures is the Fed’s preferred measure as it tries to rein inflation back to 2%. The PCE report showed inflation rising at a rate of 3% in June and the July report is expected to show it rose slightly to 3.3%. Overall, it’s down from a high of 7% a year ago.