The Fed will reduce the pace of interest rates, although it will continue to increase them – Miami Diario
This Wednesday, Jerome Powell, president of the United States Federal Reserve (FED) insisted this Wednesday that "it makes sense to moderate the pace of interest rate rises" as these approach sufficient levels to reduce inflation, adding that the The moment may be as soon as the December meeting”, the central banker stressed.
READ MORE – Increase in employment allows the Fed to raise interest rates in the US
These statements come two days before members of the US central bank stopped making public statements.
Officials will remain silent during the two weeks prior to the meeting that the institution will hold on December 13 and 14 to decide on a new interest rate hike, reported El Español.
Likewise, in his speech during an economic event organized by the Brookings Institution, Powell recalled that the effects of the "rapid" tightening of monetary policy have not yet been felt in the economy, so "it makes sense to moderate the rate of increases" .
“Restoring price stability is likely to require keeping monetary policy tight for some time. History warns against premature relaxation of the policy," she said.
“transitory” inflation
Said address comes a year after he considered it appropriate to eliminate the adjective "transitory" from the valuation of inflation due to the different interpretations it generates.
Back then, Powell could not anticipate what would happen after Russia's invasion of Ukraine, where US inflation would skyrocket to 9,1%, just as it did last June.
However, since then the rise in prices has moderated to stand at 7,7% in October.
"There are encouraging signs that inflation is moderating," Vontobel analysts stress. The same experts point out that the "Fed also seems more balanced now, as many members want to give time for the impact on the economy of the rate hikes that have already been carried out to be felt."
De 50 a 25
In turn, this would make it possible to reduce the increases to 50 basis points in December and to 25 basis points in January. In the opinion of the same experts, "this would place the Fed in quite restrictive territory."
Powell, for his part, also mentioned that the members of the Fed are firmly committed to restoring price stability, adding that "to begin with, we need to raise interest rates to a level that is restrictive enough so that inflation returns to normal." two%".
In this regard, he has recognized that "there is considerable uncertainty about what level will be sufficient" to achieve the aforementioned objective, although "there is no doubt" that they have made substantial progress, raising them 375 basis points since March. They have managed to reach the range of 3,75% and 4%.
As was also the case after the November meeting, Powell has reaffirmed that "it seems likely that the final rate level should be a bit higher than thought at the time of the September meeting."
Remarks by Chair Powell on economic outlook, inflation, and the labor market: https://t.co/NdMQeiEZWQWatch live: https://t.co/Tgzqyq713g
— Federal Reserve (@federalreserve) November 30, 2022
Miami Daily
Author: Monica Munoz 7:15 pm