US Federal Reserve Governor Jerome Powell said interest rates in the United States could rise “fairly soon” if data confirmed that the economy continued to grow and labor markets continued to improve. His comments could pave the way for a rate increase as early as mid-June.
Powell said the economy remained on “solid footing.” He regarded continued job growth and evidence of rising wages as more important than recent weakness in consumer spending and business investment.
In prepared remarks for the Peterson Institute for International Economics in Washington, Powell said: “There are good reasons to believe that underlying growth is stronger than recent readings suggest.” He added that labor-market data currently provided a better overall indication of the underlying pace of economic activity.
“Overall, labor-market indicators show an economy on solid footing,” Powell said, adding that the US central bank was progressing toward its goals of full employment and 2% inflation.
“If incoming economic data support these expectations, I believe it would be appropriate to continue gradually raising the federal funds rate,” he said.
Powell’s remarks came a day before Federal Reserve Chair Janet Yellen was scheduled to speak.