The Fed Chairman’s comments appeared to counter market expectations that the central bank’s rate hikes had come to an end.
The strength of the US economy and the continued rigidity of the labor markets could justify further increases in interest rates from the Federal Reserve, the Federal Reserve said on Thursday. Fed Chairman, Jerome Powell in comments that seemed to counter the market expectations that the central bank’s rate hikes had come to an end.
“We are attentive to recent data that shows the resistance of economic growth and the demand for labor. Additional evidence of persistently above-trend growth, or that labor market tightness is no longer easing, could put further inflation gains at risk and could justify a further hardening of monetary policy,” Powell said in remarks to the Economic Club of New York.
Rates: what data does the Fed look at to make that decision?
For inflation to return permanently to 2% target of the Fed, “a period of below-trend growth and a further relaxation of labor market conditions“Powell stated.
Since the Federal Reserve began raising interest rates in March 2022, unemployment has changed little and is at 3.8%, less than what most central bank officials consider non-inflationary. He economic growth annual rate has remained above the 1.8% year-on-year rate that considers the underlying potential of the economy.
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Argentine News
The Federal Reserve is “proceeding with caution” in assessing the need for further rate hikes, Powell said, likely leaving intact current expectations that the agency will keep its benchmark interest rate stable in the current range of 5.25% to 5.5% in the next meeting from October 31 to November 1.
There are indications that the working market is cooling, Powell said, with some important measures approaching levels seen even before the pandemic.
Source: Ambito
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