(EFE).- The chairman of the United States Federal Reserve said Wednesday after a new 75-basis-point interest rate hike that more increases will likely be appropriate in the coming months.
Speaking at a press conference, Jerome Powell said continued aggressive monetary action will be needed as part of efforts to bring inflation back down to the Fed’s 2 percent target.
The Fed’s latest move marked its fifth increase in the federal-funds rate since March and its third consecutive steep hike of three-quarters of a percentage point.
Following the latest two-day meeting of the Federal Open Market Committee (FOMC), the Fed’s monetary policy-making body that Powell heads, he noted that the central bank has raised interest rates by three percentage points this year.
He said the Fed’s projections are for the federal-funds rate – now at a target range of between 3 percent and 3.25 percent – to stand at year’s end at 4.4 percent, up a full percentage point from the central bank’s June forecast.
Even so, the forecasts for the next two years still suggest that the most aggressive phase of the rate hikes may be coming to a close.
The federal funds rate is expected to stand at 4.6 percent at the end of 2023, which would be the highest level since 2007, before being lowered to 3.9 percent at the end of 2024 and to 2.9 percent by the close of 2025.
“At some point, as the stance of policy tightens further, it will be appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,” Powell said.
He clarified, however, that future FOMC decisions will depend on how the economy evolves and the impact of more restrictive monetary policy on inflation.
While the pace of rate hikes may slow in the near future, Powell gave no reason to expect the Fed will cut rates any time soon.
“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” the Fed chief said, referring to an annual inflation rate that stood at a persistently high 8.3 percent in August. “The historical record cautions strongly against prematurely loosening policy.”
Powell acknowledged that higher interest rates will likely cause “a sustained period of below-trend growth, and there will very likely be some softening of labor market conditions.”
Those expectations were reflected in the Fed’s latest economic forecasts, which sees US gross domestic product growing at a meager 0.2 percent this year and 1.2 percent next year (compared to a June forecast for 1.7 percent growth in both years).
“The labor market continues to be out of balance, with demand for workers substantially exceeding the supply of available workers,” the Fed chief said.
The central bank expects that situation to change, with Fed forecasts indicating the unemployment rate will rise from 3.7 percent at present – a level economists regard as close to full employment – to 4.4 percent by the end of 2023. EFE
© 2022 EFE News Services (U.S.) Inc.
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Raising interest rates that will destroy the American Housing market at a time Joe let in 2-3 million illegals who already have no housing built, is just plain social insanity, ,,,or planned destruction of the American economy and peace of American cities by the socialist taken over Democrat party of American traitors, desperate to inflict as much damage to the American people before the next election that if they cannot steal, at least they can inflict as much punishment as they can until their next opportunity to create more crisis that they never let their opportunities to seize power and enrich themselves at other honest people’s expense to go to waste. The boldness of their traitorous acts and the magnitude of their socially expensive failures can no longer mask their true woke intentions to lead the American people and American economy into a worldwide social redistribution of ALL the American wealth and success that THE PEOPLE have built up over the past 250 years of what used to be a successful Democratic Republic, now turned into a socialist state of confusion. THE PEOPLE have a choice, EQUITY which is the leveling of the American Successful down to the level of the worldwide losers, or EQUALITY of opportunity to rise above failure and succeed, that only when achieved at the individual level, collectively leads to Making America Great AGAIN. The level of their Socialist government infiltration is now being exposed in every failed economic attempt.
Where’s Congress on this? How did the Fed, of all entities become so all-powerful? It was not designed that way originally; you’d think it was Monopoly money. Hey dummies– It’s OUR money!
So why is it my INTEREST i get for my savings/checking accounts, ARE STILL PITIFULLY LOW?