Friday, September 29, 2023

Powell says the Fed will keep rates high but opens a door to pause hikes

The president of the Federal Reserve (Fed)Jerome Powell, affirmed this Friday that the regulator will continue to maintain high rates until inflation is controlled, although he opened a door to a pause in the increases.

“We are prepared to further increase rates if appropriate and intend to maintain the policy at a restrictive level until we are sure that inflation is falling sustainably toward our target,” he said in a speech at the Jackson Hole (Wyoming) forum.

The president of the US regulator remained faithful to the words he spoke at the last press conference, in which the body announced the rise of another 0.25 percentage points in Julyup to a range between 5.25 and 5.5%.

However, in the conclusions of his speech he did open the door for a pause: “In the next meetings we will evaluate our progress based on the totality of the economic data and the evolution of prospects and risks. Based on this assessment, we will proceed cautiously in deciding whether to tighten monetary policy further or instead hold the rate,” he said.

The most important data that they will analyze, he explained, is the Underlying inflationwhich peaked at 5.4% in February 2022 and gradually decreased to 4.3% in July.

“The monthly drops Core inflation in June and July were welcome, but two months of good data is just the start of what it will take to build confidence that inflation is sustainably declining towards our target,” he said.


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