Jerome Powell
Powell: The road to reducing inflation to the target level of 2% is still long
The Federal Reserve kept interest rates unchanged, but hardened its stance on monetary tightening, as it is expected to raise interest rates again by the end of the year and tighten monetary policy until 2024 more than previously expected.
As they did in June, central bank policymakers on average expect the benchmark overnight interest rate to peak this year in a range of 5.50-5.75%, a quarter of a percentage point above the current range.
But the central bank’s updated quarterly forecasts indicate that interest rates will fall by only half a percentage point in 2024, compared to expectations that they will fall by a full percentage point during the central bank’s meeting in June.
The bank’s main index for measuring inflation is expected to decline to 3.3% by the end of this year, to 2.5% next year, and to 2.2% by the end of 2025.
The Federal Open Market Committee, which sets interest rates, said in a statement that “inflation remains high.” The statement included expectations that included stronger economic and job growth than previous expectations, while keeping in mind the possibility of a “soft landing” for the economy.
The US Federal Reserve voted in favor of keeping interest rates at their highest level in 22 years, and the Federal Reserve raised interest rates 7 times in 2022, in meetings during the months of March, May, June, July, September, November and December, and the Federal Reserve raised interest rates 4 times in 2023. It was confirmed twice, while two meetings remain on November 1 and December 13, 2023.
The latest decision was in line with expectations, while experts and traders are closely monitoring any change in future trends. Before the monetary tightening campaign, the interest rate in March 2022 was in the range of 0.25% to 0.50%.
The Fed said in its statement that its decision to keep the key lending rate unchanged gives policymakers time to “evaluate additional information and its implications for monetary policy.”
After 11 interest rate increases since March last year, inflation has fallen sharply but remains stubbornly above the Fed’s long-term target of 2% annually – keeping the pressure on officials to consider further policy action.
The Fed said that economic activity is expanding at a “strong pace,” while pointing to strong job gains and a decline in the unemployment rate.
A series of recent positive economic data has raised hopes that policymakers can slow price increases without causing a devastating recession.
Federal Reserve Chairman Jerome Powell said there is a good chance that strong interest rate increases will not push the US economy into recession, even though there are matters beyond the central bank’s control.
He added in a press conference after the Open Market Committee fixed interest rates according to expectations, “I always believe that a smooth landing is a possible expectation.” He said his expectations remain valid, but warned that other factors may affect the central bank’s expectations.
Bank officials expected better growth and a lower unemployment rate, indicating confidence that the economy will withstand interest rate hikes without suffering too much.
US Federal Reserve Chairman Jerome Powell said that the road to reducing inflation to the target level of 2% is still long.
2023-09-21 16:56:05
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