Fed: Rate hike will be accelerated, if needed

WASHINGTON (AP) — The Federal Reserve will increase its benchmark interest rate faster than expected, to a level high enough to restrict economic growth and contracting, should it need to control runaway inflation, said its president, Jerome Powell.

Powell's message was more aggressive than his statements last week, when the Fed decided to raise key rates a quarter point from nearly zero to a range of 0.25% to 0.5%.

His comments, made in a speech to the National Association for Business Economics of the United States (NABE), caused a crash in the stock market by implying that mortgages, auto loans, credit cards and other loans to consumers and businesses could see an increase.

Powell noted that, if necessary, the US central bank will be open to raising rates by half a point, a comparatively aggressive increase, at upcoming Fed meetings. The agency had not increased its reference rate by half a point since May 2000.

The official added that Fed policymakers will be willing to go even to the extent of sending interest rates to a “restrictive territory” that slows economic growth and possibly raises the unemployment rate, should they need to contain high inflation.

“We will take the necessary steps to ensure a return to price stability,” the Fed president said in his speech to NABE. “In particular, if we conclude that it is appropriate to act more aggressively by raising the federal funds interest rate by more (than a quarter of a point) in a single meeting or meetings, we will do so.”