Will the US central bank (Fed) raise rates for the 11th time in a row at its next meeting in June, or take a break? A decision has not been made, the institution’s president, Jerome Powell, said on Friday. “We have not made any decisions about the extent to which further policy tightening would be appropriate,” the Fed chair said in a conversation in Washington with former chairman Ben Bernanke, who was in Washington during the 2008 financial crisis.
However, “given the road traveled, (…) we can afford to examine the data and the evolution of the perspectives and make careful evaluations,” said Jerome Powell.
Next Fed meeting in mid-June
The Federal Reserve, since March 2022, has raised its rates 10 times, at each meeting, taking them from a range of 0-0.25%, to 5.00-5.25%. This leads banks to raise the cost of the loans they offer to families and companies, in order to alleviate the pressure on prices.
But, while the effects of these increases take months to be felt in the real economy, and the recent banking crisis has led banks to be more cautious with the loans they grant, which acts as a rise in interest rates, the question of a pause on rate hikes is now on the table. Because the risk of too strong tightening would trigger a recession. “Until very recently, it was clear that (monetary) policy needed to be tightened,” Jerome Powell stressed.
Positions diverge among Fed officials on whether or not to continue raising rates at the next meeting, scheduled for June 13-14.
Source: BFM TV
