Federal Reserve Chair Signals End of Interest Rate Hikes
Fed Chairman Powell Addresses the Press After Policy Rate Unchanged
US Federal Reserve (Fed) Chairman Jerome Powell recently held a press conference following the decision to keep the policy rate unchanged at 5.25-5.50 percent, the highest level in 22 years. This decision was in line with expectations and comes as the Fed continues its efforts to address inflation and economic pressures.
During the conference, Powell highlighted the decrease in inflation from its highest levels and noted that this had occurred without a significant increase in unemployment. However, he also emphasized that inflation remains very high and the ongoing process to reduce it is not guaranteed. As a result, the future course of inflation remains uncertain.
Powell acknowledged that the steps taken by the Fed had pushed the policy interest rate into a very restrictive region. He also stated that the tight monetary policy has put downward pressure on economic activity and inflation, with the full effects of the tightening potentially not yet felt.
While Powell welcomed recent low inflation data, he emphasized the need for more evidence to build confidence that inflation is sustainably moving towards the target. He also indicated that the process of reducing inflation to 2 percent will take time, and the Fed is prepared to tighten policy further if necessary.
Despite the Fed’s belief that the policy rate is likely at or near its peak in the tightening cycle, Powell emphasized the uncertainty of the economic outlook and the need to maintain a sufficiently restrictive monetary policy to reduce inflation to 2 percent.
Additionally, Powell addressed the possibility of future interest rate hikes, stating that while Fed officials do not find it appropriate to increase interest rates further at this time, they are not ruling out this possibility.
Regarding the state of the US economy, Powell acknowledged its resilience but also highlighted the possibility of a recession. He stressed the uncertainty of the current economic situation and noted that it is too early to declare victory.
The possibility of interest rate cuts was discussed during the meeting, and Powell made it clear that an interest rate increase is not ruled out if the data warrants it.
In conclusion, Powell’s press conference provided insight into the Fed’s strategy for addressing inflation and economic challenges. The central bank remains watchful of the evolving economic landscape and stands ready to take further action as needed.
