Following the vital decision from the Federal Reserve to raise interest rates by another 25 bps, Fed Chair Jerome Powell spoke on the current inflation fight and assures that “the banking system is safe,” in subsequent statements.
Specifically, Powell noted that the “process of getting inflation down has a long way to go, it will be bumpy.” Conversely, the interest rate decision comes amidst a budding banking crisis, following the collapse of Silicon Valley Bank just weeks ago.
Powell Addreses Interest Rate Decision
All eyes were on the direction the Federal Reserve would take concluding today’s vital meeting. Moreover, many wondered whether the Fed would consider their consistent interest rate hikes amidst what is a brewing crisis in the banking sector.
Now, following the decision to raise interest rates another 25 bps, Fed Chair Jerome Powell discussed the inflation fight while assuring that “the banking system is safe.” Conversely, the sentiment arrives after two of the largest banking failures since the 2008 financial crisis.
Powell stated that “Inflation remains well above our longer-run goal of 2%.” Additionally stating, “inflation has moderated somewhat since the middle of last year, but the strength of these recent readings indicates that inflation pressures continue to run high.”
Moreover, Powell stated, “The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.” Alternatively, Powell spoke about the committee’s confidence regarding stress in the banking sector. Stating, “I guess our view is the banking system is sound and resilient. It’s got strong capital and liquidity.”
Conclusively, Powell was asked whether or not the Fed considered a pause on interest rate hikes. Thereafter, Powell assured it was considered, but deviated from following “the meeting data on inflation and the labor market came in stronger than expected.” Powell remarked, “before recent events, we were clearly on track to continue with ongoing rate hikes.”