Pause and eventual reversal: Jerome Powell hints about limits of key rate hikes

Chairman Jerome Powell of the Federal Reserve, the US central bank, has hinted that interest rates in the United States may not be raised further in the interest rate decision next month.

During a speech at a conference in Washington, he pointed out that strong intervention by the Fed is less necessary now that the US financial sector is already tightening due to the recent turmoil in the banking sector.

“We have come a long way,” Powell said in his speech. He was referring to the many rate hikes that the Fed has already implemented over the past period to combat high inflation. “Now that we’ve come this far, we can afford to look at the dates and the evolving outlook to make careful assessments,” he added, reading from prepared notes.

Powell also explained that the idea behind the rate hikes is that borrowing becomes more expensive. For example, the central bank hopes to curb demand in the economy and ensure that prices do not rise so sharply.

Leave a Reply

Your email address will not be published.