UPDATE - Fed chair says inflation 'moderated somewhat' since mid-2022, but 'pressures run high'

By Ovunc Kutlu

ISTANBUL (AA) - US Federal Reserve Chair Jerome Powell said Wednesday that inflation has "moderated somewhat" since mid-2022 but "pressures run high."

"We have raised interest rates by 5% in little more than a year," he said in a news conference after the Fed made a 10th rate hike to fight record inflation that climbed to a 40-year high last June.

Powell's comments came after the Federal Open Market Committee (FOMC) unanimously decided to raise the target range for the federal funds rate to between 5% and 5.25% -- its highest since August 2007.

"We are seeing the effects of our policy tightening on demand and the most interest rate sensitive sectors of the economy, particularly housing and investment. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation," he said.

Powell admitted that it is likely the American economy with “face further headwinds" from tighter credit conditions, which has been ongoing for the past year due to the Fed's policy actions.

"The strains that emerged in early March appear to be resulting in even tighter credit conditions for households and businesses," he said amid a recent banking crisis in the US, which saw the rapid demise of four banking institutions in recent weeks.

Powell stressed that tighter conditions are likely to weigh on economic activity, hiring and inflation, but said the extent of their effects "remains uncertain."

He said the Fed's future policy actions will depend on "how events unfold" and the FOMC will take into account the effects of cumulative monetary tightening on economic activity, inflation and developments in those two areas.

"We will make that determination meeting by meeting, meaning based on the totality of incoming (macroeconomic data) and the implications of the outlook of economic activity and inflation," he said.

But he warned that the FOMC is prepared to do more if greater monetary policy restraint is warranted until the Fed brings inflation down to its goal of 2%.