Powell says that rates will rise more and remain high ‘for some time.’

“It is likely that restoring price stability will require holding policy at a restrictive level for some time,” he said. “We will stay the course until the job is done.”

The Fed chair particularly pushed back on any notion that a recent moderation in price increases is a sure sign that inflation will continue to cool.

“Down months in the data have often been followed by renewed increases,” he said. And while many economists expect inflation to moderate next year, “forecasts have been predicting just such a decline for more than a year, while inflation has moved stubbornly sideways.”

Later, Mr. Powell added that “we’re going to have to be humble and skeptical about forecasts for some time.”

Plus, Mr. Powell pointed out, even if goods prices weigh on inflation and rent growth moderates next year as expected, the job market remains very tight — and signs of slowing so far are not conclusive.

When employers are paying more in wages, they are likely to try to pass those climbing labor costs onto their customers in the form of price increases, making wage growth a critical yardstick for inflation watchers.

“We want wages to go up strongly, but they’ve got to go up at a level that is consistent with 2 percent inflation over time,” Mr. Powell said. “You’re 1.5 or 2 percent above that with current wage increases.”

Article source: https://www.nytimes.com/2022/11/30/business/powell-fed-interest-rates-speech.html