The Strategist

Fed chief links refusal to raise rate to slowing inflation



06/24/2022 - 07:29



Jerome Powell, the chairman of the US Federal Reserve (Fed), stated that the watchdog will halt the crucial rate-hike cycle if it observes unmistakable indications of a slowdown in US inflation. The Fed now views a rate increase as a practical means of reestablishing price stability.



Federalreserve
Federalreserve
"We will be watching for clear indications that inflation is reducing in the upcoming months. We anticipate that more rate increases will be necessary. Over the last year, inflation has undoubtedly been unusually high, and more shocks might be in store," Mr. Powell told during his speech to the Senate.

In this context, he claimed, it is reasonable to hike rates. Mr. Powell emphasized that the Fed's key goal is to bring inflation to 2 percent while maintaining a "strong labor market."

The Fed chose to increase its benchmark rate last week, bringing it to a range of 1.50-1.75 percent (0.75 percent up from its previous target). The rate may increase to 3.25 to 3.50 percent at the end of the year, according to the Fed's Open Market Committee. Rising US inflation, which hit 8.6 percent in May, has made the rate rise process easier to accelerate.

source: cnbc.com

 




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