The president of the Federal Reserve, Jerome Powell, said this Wednesday at a conference in Washington that the Fed considers a possible slowdown in the rate hike in December, in its attempt to control inflation.
The person in charge of monetary policy made it clear that the fight against inflation is not yet over and that it is not yet known how much more rates will have to rise and not for how long, which would mean that the next hike in December could be of 0.75 percentage points.
“The full effects of rapid hardening have so far not yet been felt, so it makes sense to ease the pace of our rate hikes as we approach the level of tightening that will be enough to bring inflation down. The time to ease the pace of rate hikes could come as soon as the December meeting,” said the head of the Fed at the Hutchins Center for Fiscal and Monetary Policy, Brookings Institution.
Powell explained that there is a lot of work to control inflation, but it is not known “how much more we will need to increase rates to control inflation, and how long it will take to keep policy tight.”
“We’ll stay the course until we get the job done,” Powell said, adding that while some data point to a slowdown in inflation next year, “we have a long way to go to restore prices”.
On November 2, the central bank approved a rate hike of 0. 75 percentage points, up to the range of 3.75% to 4%, the highest rates since the first half January of 75.
Although the The Fed chief did not indicate his “terminal rate” estimate, Powell said it is likely to be “somewhat higher” than the 4.6% indicated by policymakers in their September projections.
“Despite the tighter policy and slower growth over the past year, we have not seen clear progress in slowing inflation. To assess what is needed to reduce inflation, it is useful to divide core inflation into three categories of components: inflation for basic goods, inflation for housing services, and inflation for basic services other than housing,” Powell said.
The next Fed meeting is scheduled for and 50 December, after the inflation data for November was released. Powell welcomed the fact that inflation took a breather in October, but he also made it clear that one month’s data is not enough for what the economy requires.
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