The chairman of the US Federal Reserve warned on Wednesday that the final level at which interest rates will be set at the end of the rate hike cycle could be higher than expected, taking into account economic data.
“The data received since our last meeting suggests that the final level of interest rates will be higher than expected,” Jerome Powell said at a news conference after the end of the two-day meeting of the Federal Open Market Committee ( FOMC).
Jerome Powell acknowledged that US inflation is still higher than expected. Still, he opened the door to the possibility that the next rate hikes will be less than 75 basis points, which could happen “in the next meeting” or “in the next one”.
“The moment [para aumentos menores] It’s coming up and it could happen at the next meeting,” to be held in December, “or at the next, but a decision hasn’t been made yet,” he said.
The president of the US central bank recognized, however, that it is too early to talk about stopping rate hikes, and that it is still necessary to “reach that sufficiently restrictive level” that allows inflation to be curbed and prevented from taking root. .
Powell acknowledged that there is not yet a scientific method to determine where inflation has settled, but explained that if interest rates get too high, the company can always use the tools at its disposal to stimulate the economy.
The Fed announced this Wednesday a rise of 75 basis points in its interest rate, an increase identical to the one it had decided in the last three meetings, up to a range between 3.75% and 4%.
For this reason, he considers that “continuous increases” in interest rates will be appropriate, in order to follow a “sufficiently restrictive” policy to bring inflation to the 2% target.
“The Committee is strongly committed to bringing inflation back to its 2% target,” the Fed said in a statement.
The institution explains that to determine the pace of future increases, the tightening of monetary policy, the impact on economic activity and inflation, and economic and financial developments will be taken into account.
Source: TSF
