(Washington) The Fed should resume its rate hikes, after the pause marked last week, again hinted on Wednesday its chairman, Jerome Powell, hammering that “almost all” the leaders of the institution anticipate having to raise them again by the end of the year.
“Almost all” of the institution’s officials – governors and regional branch presidents – “expect that it will be appropriate to raise interest rates somewhat further by the end of the year” , said Jerome Powell in front of elected members of the House of Representatives, during his semi-annual hearing before a committee.
On June 14, the Fed marked a pause in its key rate hikes, for the first time since March 2022, and after 10 hikes, by 5 points in total. Rates are now in the 5-5.25% range.
“At last week’s meeting, given where we were coming from and how fast we were moving, we thought it prudent ‘to keep rates where they are, to ‘allow’ Fed officials to assess the information and its implications for monetary policy,” Jerome Powell said.
These rate hikes, which encourage commercial banks to offer higher rates for loans to households and businesses, are aimed at slowing economic activity, in order to ease pressure on prices, and to slow inflation. .
This remains “well above our long-term 2% target,” the Fed Chairman said.
Thus, “to determine” how much further they will need to tighten monetary policy to achieve this objective, “we will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation , as well as economic and financial developments,” he said.
But “reducing inflation will likely require a period of below-trend growth,” Jerome Powell warned.
The next Fed meeting will be July 25-26.
Jerome Powell had already, on June 14, after the announcement of the decision of the monetary policy committee, clarified that the leaders of the institution anticipated in majority additional rate hikes. He did, however, refer to “a moderate pace.”
