Fed Chair Jerome Powell tells Congress to expect more interest rate increases

March 7 (UPI) -- Federal Reserve Chair Jerome Powell told the Senate Banking Committee on Tuesday to expect the board to continue to raise interest rates as it struggles to get inflation under control.

Powell, speaking at the first of two hearings in front of Congress, admitted that raising the interest rate eight times last year has not done enough to pull inflation down to the 2% goal that continues to hover at 5%.

He told the committee that the softening of inflation the committee saw late last year has appeared to even reserve itself as the U.S. labor market continued to be "extremely tight."

"We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to obtain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time," Powell told the committee in his opening statement.

Powell warned the committee that "it will take time" for the economy to adjust to higher interest rates meant to lower inflation. Powell said, according to the fall in inflation from a high of 7%, the board felt the need at the end of last year to shrink the size of rate increases.

He added that the strategy is under review given how the economy has bounced back.

"In light of the cumulative tightening of policy and the lack of which monetary policy affects economic activity and inflation, the committee slowed the pace of rate increases over the past two meetings.

"We will continue to make our decisions meeting by meeting, taking into account the totality of the incoming data and their implications toward the outlook for economic activity and inflation."

Powell said "achieving price stability" is essential to establishing maximum employment and stabilizing prices long term. He said history has shown that prematurely lowering interest rates would unravel the work that has been done to corral inflation while bring as little harm to the economy and jobs as possible.

"We will stay the course until the job is done," Powell said. "We understand our actions affect communities, families and businesses across the country. Everything we do is in service to our public mission."

Powell is appearing in front of the Democratic-led Senate Banking Committee on Tuesday as part of his twice-a-year visit to Capitol Hill to give legislators an update on the Fed's actions and how the economy is responding.

He will follow up by speaking to the Republican-led House Financial Service Committee on Wednesday.

The Federal Reserve has increased the benchmark interest rate eight times over the past year to a range of 4.5% to 4.75%. Some remain concerned that at least a modern recession is inevitable to drop inflation back to the 2% mark.