“It’s too early to think about pausing” on efforts to raise the Fed’s target rate, Powell said.
Speaking at a press conference after the FOMC meeting, Powell said that in terms of moving to lower rate increases of 75 basis points, “that time will come, and that time may come at the December meeting at the earliest.”
But he added that “no decision has yet been made” on what action to take at next month’s Federal Open Market Committee meeting.
The US central bank decided to raise interest rates by 75 basis points for the fourth time in a row by this percentage, and the sixth since March, to reach a range between 3.75 to 4 percent, the highest level since 2008, as part of its ongoing efforts to combat the worst rise in inflation in 40 years. .
The series of continuing interest rate increases in America over the course of 6 meetings since March, is the fastest pace of increases since Fed Chairman Paul Volcker’s campaign to control inflation in the 1970s and 1980s.
On Wednesday, US Federal Reserve officials indicated that they may soon be able to slow the pace of interest rate hikes while assessing the effects of its previous decisions on the economy.
The new tone of the monetary policy statement reflects an awareness of the continuing negative impact of the council’s rapid pace of interest rate hikes, as well as its desire to focus on reaching an appropriate level of interest rate that would be sufficient to return inflation to its target rate of two percent over time.
While the board did not disclose its intentions about future decisions, the officials said, “When determining the pace of future increases, the (FOMC) committee will take into account the impact of the cumulative tightening of monetary policy and the slowdown caused by monetary policy on economic activity, inflation, and economic and financial developments.”
This formulation acknowledges the Board’s awareness of the wide-ranging debate about the feasibility of monetary policy tightening by the Federal Reserve, its impact on the US and global economies, and the danger that continued interest rate hikes could put enormous pressure on the financial system or even lead to a recession.
The Fed statement said officials remain “on high alert to the risks of inflation”, which opens the door for further increases.
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