FED Chair Jerome Powell States Need for ”Ongoing Rate Increases”

Vignesh Karunanidhi
FED Chair Jerome Powell States Need for ”Ongoing Rate Increases"
Source: TIME

The Federal Reserve (Fed) hiked interest rates by 75 bps during the FOMC meeting today. As the battle against the fastest inflation in 40 years continues, the rising rate represents the sixth increase of the year and the fourth straight hike of 75 bps. Despite the Fed’s assertion that they would like to, interest rates are not showing any signs of slowing.

The interest rates have reached 4%, the highest since January 2008. This shows the intensity of the struggling market conditions. The Fed has been trying its best to tackle inflation and prevent the economy from dipping into a possible recession.

The Fed’s Jerome Powell states the need for ongoing rate increases

During his speech during the Federal Open Market Committee meeting today, Powell stated the need for “ongoing rate increases.” He is hinting at the possibility that the interest rate will continue to be hiked to beat the soaring inflation.

Powell also mentioned, “…the ultimate level of interest rates is higher than previously expected.” This is a possible interpretation that if inflation doesn’t come to a more neutral level, the Fed will likely have to elevate interest rates. The possibility of a full rate hike might also be on the books if inflation spikes.

Powell also stressed that continued inflation can bring more economic suffering than a recession. He also expressed that he wished there was a painless way to do that. If the inflation doesn’t cool down as the Fed expects, the chances of it tightening monetary policy are also high.