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Just two weeks before the next interest rate decision, US Federal Reserve Chairman Jerome Powell left open the possibility of a further interest rate increase in the fight against high inflation.
The decision on additional monetary policy tightening will depend on future economic data, further developments in the outlook and risks, Powell said on Thursday during an appearance at the New York Economic Club. Additional indications of strong economic development could make an interest rate increase necessary.
Given the risks, the central bank will proceed “cautiously,” Powell continued. He also pointed to a tightening in financial conditions, driven by a rise in longer-term bond yields. Continued changes in financial conditions could impact further monetary policy. A rise in government bond yields could make a rate hike less necessary, the central banker said.
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Powell reiterated previous statements. Following the latest interest rate decision in September, he had already made it clear that monetary policy decisions depend on the further development of the economy and inflation.
Powell’s appearance before the business club is seen by the market as the last opportunity to provide an indication of further monetary policy in the USA before the Fed’s upcoming interest rate decision at the beginning of November. In the coming days, the so-called silent phase will begin, during which central bankers generally no longer comment on monetary policy issues before an interest rate decision.
The US Federal Reserve recently paused interest rates and left the key interest rate unchanged in a range of 5.25 to 5.50 percent in September. The Fed had previously combated high inflation in the country with sometimes strong interest rate increases. On the financial markets, a continuation of the interest rate pause and an interest rate increase are considered possible options.
Powell’s statements had little effect on the foreign exchange market. The euro exchange rate was only able to temporarily extend its previous gains against the dollar.
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NEW YORK (dpa-AFX)
Bildquelle: SAUL LOEB / Kontributor/Getty Images, Alex Wong/Getty Images
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2023-10-19 18:25:00
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