Federal Reserve Chair Jerome Powell has hinted that the Fed may pause raising interest rates at the Federal Open Market Committee (FOMC) convocation coming month. “ Having near this far, we can afford to look at the data and the elaborating outlook and make careful assessments, ” Powell spoke.
Fed Chair Jerome Powell on Rate Hikes
Federal Reserve Chairman Jerome Powell has hinted that the U.S. Central Bank may pause its series of interest rate hikes after boosting rates 10 times in a row. The federal funds rate raised from near zero a year ago to 5.00%-5.25%, its highest position in 16 years. The latest rise was by 25 basis points in March.
Speaking at a Fed conference in Washington alongside former Fed Chair Ben Bernanke, Powell told “ We’ve come a long way in policy tightening and the stance of policy is restrictive We’ll be covering as we assess the extent to which added policy firming may be appropriate to return inflation to 2 over time. ” Noting that the “ assessment will be a proceeding one, ” Powell elaborates:
As we move ahead meeting by meeting having come this far, we can afford to look at the data and the evolving outlook and make careful assessments.
Powell clarified that the current position of the central bank’s standard rate, which has an impact on various consumer and business loans, is sufficient to curtail borrowing, spending, and overall economic growth.
“ We face uncertainty about the lagged effects of our tightening so far, ” the Fed president troubled, adding that “ the threats of going too important versus doing too little are getting more balanced. ”
Moreover, Powell pointed out that the recent turmoil in the banking sector, resulting from the recent collapse of three major banks, is likely to lead banks to scale back their lending exercise. This deduction in the lending pace could weaken the economy.
Remarking that events in the banking sector “ are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring, and inflation, ” the Fed chair featured:
As a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals … Of course, the extent of that is highly uncertain.
Powell added that the data has remained to support the Fed’s view that “ bringing inflation down will take some moment. ”
(Kevin Helms, Bitcoin.com, 2023)