Powell signals more hikes ahead if US economy stays strong

Federal Reserve Chairman Jerome Powell signaled Friday that he expects the Fed to continue gradually raising interest rates if the U.S. economic expansion remains strong.

Next month, the Fed is widely expected to resume raising rates.

Speaking to an annual conference of central bankers in Jackson Hole, Wyoming, Powell said the Fed recognizes the need to strike a careful balance between its mandates of maximizing employment and keeping price increases stable. He said a gradual approach to rate hikes is the best way to navigate between the risks of raising rates too fast and "needlessly shortening the expansion" and moving too slowly and risking an overheated economy.

"My colleagues and I," the Fed chairman said in his speech, "are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent."

Powell sketched a positive picture of the U.S. economy. "The economy is strong," he said. "Inflation is near our 2 percent objective and most people who want a job are finding one."

Powell made no mention of the recent public criticism from President Donald Trump, who has said he is unhappy with the Fed's rate hikes. The president has complained that the Fed's tightening of credit could threaten the continued strong economic growth he aims to achieve.

Most Fed watchers foresee two more hikes this year — next month and then in December.

The Fed's policy rate now stands in a range of 1.75 percent to 2 percent.