Fed's Powell warns of inflation 'head fakes,' signals more rate hikes are possible

Federal Reserve Chair Jerome Powell on Thursday struck a cautious note about the future of monetary policy, warning that it is premature to declare victory against inflation and that additional rate hikes may be warranted.

"We know that ongoing progress toward our 2% goal is not assured: Inflation has given us a few head fakes," Powell said in remarks prepared for delivery at an event hosted by the International Monetary Fund. "If it becomes appropriate to tighten policy further, we will not hesitate to do so."

Policymakers have raised interest rates sharply over the past year, approving 11 rate increases in the hopes of crushing inflation and cooling the economy. In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.

Although inflation has cooled considerably in recent months, it remains up 3.7% compared with the same time one year ago, according to the most recent Labor Department data.

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