Wall Street closed higher after Fed Chair Powell delivered a “moderate” speech.

Federal Reserve Chairman Jerome Powell said on Friday there remains a risk that inflation will not fall to the Fed’s 2% target as the central bank faces the last mile in its battle with higher prices.

“Additional evidence of sustained above-trend growth could put further progress in inflation at risk and could call for further monetary tightening,” Powell said.

In general, if demand is very hot, employers will want to hire to meet that demand. But many companies still struggle to hire, according to business surveys conducted by groups such as the National Federation of Independent Business. In theory, this could lead to higher wages in order to secure talent — and those higher costs could then be passed on to consumers.

While some Fed officials advocate a more aggressive stance on fighting inflation, others believe that there will eventually be enough restraint in the economy and that further increases could cause unnecessary economic damage. The delayed effects of rate hikes on the broader economy are a major uncertainty for officials, because it is not clear when these effects will fully take hold. Research suggests that it takes at least a year.

Powell pointed to the steady progression in inflation in the past year: The Fed’s preferred measure of inflation — the personal consumption expenditures price index — rose 3% in June from a year earlier, down from a rise of 3.8% in May. The Commerce Department will officially release the personal consumption expenditures figures for July next week, although Powell did indeed review that report in his speech. He said the Fed’s preferred measure of inflation rose 3.3% in the 12 months ending in July.

The consumer price index, another closely watched measure of inflation, rose 3.2% in July, a faster pace than 3% in June, although underlying price pressures continued to slow that month.

And in his speech on Friday, Powell stuck firmly to the Fed’s current inflation target of 2%, which was formalized in 2012 – at least for now. The Fed is scheduled to review its policy framework around 2025, which could be an opportunity to set a new inflation target.

Powell also participated in the debate among economists about whether the “neutral interest rate”, also known as r*, is higher given that the economy remains on a strong footing despite the aggressive pace of rate hikes by the Fed.

In theory, a neutral rate is when real interest rates do not constrain or stimulate growth. The Fed chief said that higher interest rates are likely to put pressure on the economy, implying that r* may not be structurally higher, though he said it was an unobservable concept.

“We see the current policy stance as restrictive, putting downward pressure on economic activity, employment and inflation. But we cannot say with certainty the neutral interest rate, and so there is always uncertainty about the exact level of monetary policy constraint,” Powell said.

Either way, while the Fed chair has hinted that further rate hikes could be low, there is no guarantee either way.