Federal Reserve to Face Interest Rate Challenges in Next Period (Getty)
Expect two officials inside Federal Reserve Bank On Friday, the rate of interest rate hike on bank funds will slow during upcoming meetings, but they indicated that this could mean that More leverageWith interest that stays higher for longer periods.
Thomas Barkin, chairman of the Federal Reserve Bank of Richmond, predicted that in the next period the bank will “shift its foot from accelerator to brake” to hear when it should stop raising rates.
Barkin confirmed in an interview with CNBC, the news channel that deals with the economy and markets, that he is personally ready to do so, noting that this change could mean a lower increase in interest rates in the coming meetings, but perhaps for longer periods, and to reach a higher point than was supposed.
After the bank’s expectations indicated that the highest interest rate on its funds would reach 4.6% in the next period, Barkin confirmed that see it above 5%.
On Wednesday, the Federal Reserve raised the interest rate on its funds by 75 points, to a range of 3.75-4 percent, after being close to zero earlier in the year. The current interest rate is the highest since 2008, at the height of the global financial crisis.
In turn, Susan Colin, a member of the bank’s board of directors and one of the voters on the decision to move the interest rate, confirmed that the bank will spare no effort to tackle the largest inflation of the past four decades, noting that she and her companions entered the bank in a new phase, after Wednesday’s decision, they must make a decision on the amount of the increase required in the next period.
Colin explained, in an interview with “CNBC”, that the bank’s policies reached a somewhat restrictive phase for economic activity during their war on inflation, “but there is still a lot to do”.
Colin said his interest for the current period has gone from “rapidly raising interest” to “determining the level interest rates should reach” in order to achieve effectiveness in resilience to inflation, noting that this is what will make it possible to strike a balance between the rate of declining inflation and the growing weakness of the economy.
The two officials spoke in the wake of the release of Job additions report On Friday, the U.S. Department of Labor confirmed the continued strength of the labor market, as U.S. companies added 261,000 non-farm jobs during the month of October, despite the unemployment rate rising from 3.5% of the previous month at 3.7% in the latest readings.
The strong additions to the labor market are a stimulus for the Fed to continue its restrictive policies, despite warnings from all directions that the US economy is approaching recession.
But Colin stressed on Friday that entering the US economy into a severe recession would not be necessary to eliminate high inflation.
