Jerome Powell announced that the Federal Reserve may slow its rate hikes in December; he does not mention how much they will rise or for how long they will continue in their attempt to control inflation
Federal Reserve Chairman Jerome Powell told a conference in Washington on Wednesday that the Fed is considering a possible slowdown in rate hikes in December as it tries to control inflation .
The person in charge of monetary policy made it clear that the fight against inflation is not yet over and that it is not yet known how much more rates will have to rise and for how long, which would mean that the next hike in December could be 0.50 points percentage .
“The full effects of rapid tightening have so far not been felt, so it makes sense to ease the pace of our rate hikes as we approach the level of tightening that will be enough to bring inflation down . The time to ease the pace of rate hikes could come as soon as the December meeting,” said the Fed head at the Hutchins Center for Fiscal and Monetary Policy, Brookings Institution.
Powell explained that there is a lot of work to control inflation, but it is not known ” how much more we will need to raise rates to control inflation , and how long it will take to keep policy at a restrictive level.”
“We’ll stay the course until we get the job done,” Powell said, adding that while some data points to a slowdown in inflation next year, “we have a long way to go to restore prices . ”
On November 2, the central bank approved a rate hike of 0.75 percentage points , to the range of 3.75% to 4%, the highest rates since the first half of January 2008 .
While the Fed chief did not indicate his estimated “terminal rate,” Powell said it is likely to be “somewhat higher” than the 4.6% indicated by policymakers in their September projections.
“ Despite the tighter policy and slower growth over the past year, we have not seen clear progress in slowing inflation . To assess what is needed to bring inflation down, it is useful to break core inflation into three categories of components: core goods inflation, housing services inflation, and non-housing core services inflation,” Powell said.
The next Fed meeting is scheduled for December 14 and 15 , after inflation data for November is released. Powell has been pleased that inflation has taken a breather in October, but has also made it clear that one month’s data is not enough for what the economy requires.