Fed chairman says gradual rate hikes best path 'for now'

WASHINGTON - US Federal Reserve Chairman Jerome Powell said on Tuesday that for now, the best way forward for the central bank is to keep gradually raising the federal funds rate.

"We are aware that, on the one hand, raising interest rates too slowly may lead to high inflation or financial market excesses. On the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective," Powell testified before the Senate Banking Committee.

"As always, our actions will depend on the economic outlook, which may change as we receive new data," he said, adding that the US economy has grown "at a solid pace" so far this year, with a strong job market and inflation close to the central bank's objective.

In its semi-annual monetary policy report delivered to Congress last week, the Fed had reiterated that it would stick to gradual rate hikes on the expectation of continuous economic expansion.

It last month raised its target range for the benchmark federal funds rate for the second time this year, and penciled in two more rate hikes for the year.