Federal Reserve Chairman Jerome Powell gave his annual policy speech on Friday, where he discussed the Fed’s ongoing battle against Inflation. Inflation has grown over the past months, leading to the Federal Reserve increasing interest rates to counter it.
These increases have hit the Economy hard, however, they may not be over according to Powell. Will the Federal Reserve Increase Interest Rates a Fifth Time?
Will the Federal Reserve Increase Interest Rates a Fifth Time?
According to Powell, it is possible that we will see another increase in interest rates by the Federal Reserve. Powell affirms in his speech that the Fed will “use our tools forcefully” to attack inflation. According to reports, Inflation has grown to its highest in 40 years.
There have already been four interest rate increases totaling 2.25 percentage points. However, Powell said this is “no place to stop or pause.” Markets are awaiting the Fed’s next meeting in September. They will see if the rate-setting Federal Open Market Committee will enact a third consecutive 0.75 percentage point increase and a fifth in total.
While it is uncertain if we will see another point increase in rates, it is very likely that one will be introduced in September unless Inflation magically drops back down to the 2% mark. This will likely induce the “more pain” that Powell discussed in his speech.