Powell Says Fed Needs Compelling Evidence of Inflation Slowdown to Alter Rate-Rise Path - 22 iunie 2022
Chairman Jerome Powell said the Federal Reserve plans to continue raising interest rates until it sees clear proof that inflation is slowing to the central bank’s 2% target.
Officials raised interest rates by 0.75 percentage point last week, the largest increase since 1994, and Mr. Powell and several colleagues have signaled that another such increase could be warranted at their next meeting, July 26-27. His remarks underscore the challenge facing the central bank as it raises interest rates at the most rapid clip since the 1980s to slow the economy and bring down inflation.
The Fed’s benchmark federal-funds rate, currently in a range between 1.5% and 1.75%, is historically low, but at the levels that prevailed in early 2020, before the pandemic caused central bank officials to slash the rate to near zero. They held the rate near zero until this past March.
Officials’ new projections released last week showed all 18 of them expect to raise the fed-funds rate to at least 3% this year, with most seeing it rising to a range between 3.25% and 3.5% by December. That would exceed by 1 percentage point the highest level it reached after the 2008 financial crisis, in 2018.