Yahoo Finance reporter Jen Schonberger shares the latest comments made by Fed Chair Jerome Powell about interest rate hikes.

Video Transcript

DAVE BRIGGS: Let's get you up to speed now on the Fed. Federal Reserve Chair Jerome Powell, as we've just discussed, signaling that the central bank will likely slow the pace of interest rate hikes in December. Yahoo Finance's Jen Schonberger, she gets it. She's not a Tom Hanks GIF from the movie "Big," so she can explain it to us and what we heard today. Hi, Jen.

JENNIFER SCHONBERGER: Hi, Dave. I'll have to check out that movie. But in the meantime, Chair Powell setting the table for a 50 basis point rate hike at the Fed's December meeting, saying in a speech this afternoon at the Brookings Institution that it makes sense to slow down the pace of interest rate hikes as the Fed gets closer to a peak level on its policy rate, and that the Fed may slow down as soon as the next meeting. Take a listen.

JAY POWELL: Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting.

JENNIFER SCHONBERGER: Powell says it's prudent to slow down the pace of hikes, given that monetary policy takes time to filter through the economy and that the full effects of the Fed's rate hikes have yet to be felt. He also argued slowing down hikes and holding rates longer at a high level is a form of risk management to guard against raising rates too high and causing a recession, though he cautioned against loosening policy too early and said, quote, "cutting rates is not something we want to do soon. That's why we're slowing down."

The Fed Chair says he doesn't want to overtighten. Powell says he thinks it's likely the Fed will need to raise rates, quote, "somewhat higher than estimated" in September, but there was, quote, "considerable uncertainty" about what rate will be sufficient. He also said the Fed is likely to hold rates high for some time. Now, Powell says that he thinks that there is a chance we can have a soft landing, though the path for that has narrowed to the extent for how long the Fed will hold interest rates at a higher level, though he thinks we can see unemployment come down without having a severe recession.