“There is an obvious need to move quickly to return the monetary policy stance to a more neutral level and then move to more restrictive levels if that is what is required to restore price stability.”
In particular, he added, “if we conclude that it is appropriate to act more aggressively by raising the fed funds rate by more than 25 basis points in a meeting or meetings, we will do so.”
In the past week, Fed officials raised interest rates for the first time in just over three years and signaled more hikes are on the way.
Most of them see the short-term policy rate, which has hovered near zero for two years, at 1.9% by the end of this year, a pace that could be achieved with increases of a quarter of a percentage point in each one of its next six monetary policy meetings.
By the end of next year, Fed officials expect the central bank’s overnight benchmark rate to sit at 2.8%, which would push borrowing costs to a level where they would actually start. despite growth. Most agency officials see the “neutral” level as between 2.25% and 2.5%.
Powell also reiterated Monday that the Fed’s cuts to its huge balance sheet could start as early as May.
The US unemployment rate is currently 3.8% and job openings per person are at a record level.
By Ann Saphir of Reuters Agency
Source: Ambito
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