Fed Chairman announces that interest rates will rise more than expected

This Tuesday, Federal Reserve System (Fed) Chairman Jerome Powell warned on the Senate floor that the agency will likely be required to raise interest rates more than expected if economic data warrants it.

Powell explained that so far financial data has been stronger than expected, which "suggests that the ultimate level of interest rates is likely to be higher than previously anticipated."

The Fed chairman said that, should the totality of inflation data and labor shortages come to justify further "tightening," he will be prepared to "increase the pace of rate hikes." Increases in Fed interest rates usually mean higher mortgage rates, credit card rates and loans. But it could be the most effective way to combat inflation.

"We’re very far from our price stability mandate and, in effect, the economy is past most estimates of maximum employment," he said.

Powell also stated that he is still hopeful that the unemployment rate will not continue to rise. However, he stressed that right now his priority is to fight inflation.

Democrats expressed concern that these measures could lead to a recession and push up the unemployment rate. However, Republicans agree that the measure announced by the Fed chairman is ideal for controlling inflation and having "less significant effects on the labor market."

"We do not seek, and we don’t believe we need to have a very significant downturn in the labor market," the Fed chairman said for his part, assuring that the job market is so strong that it appears the possibility of a recession is far away.