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Investing.com – The US Federal Reserve announced that it will raise interest rates by 25 basis points, to 4.75%. Powell also announced that further rate hikes appear important to control inflation.
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The most important thing said by Powell
- We still have more work to do
- The repercussions of the rapid tightening will take place
- We expect more rate hikes to enter the tightening phase and we are expected to stay there for a while
- The tightening continues because inflation has soared
- We still need more evidence to be reassured that inflation will remain bearish
- We will define our vision of interest expectations by the end of the year in the March meeting, and now the most important thing we care about is seeing inflation decline and the strength of the labor market
- We set our rate target at 5.00%, 5.25%, and we will update that at the March meeting.
- We may raise the interest target or we may keep it the same, according to the data for February.
- We will continue to make our decisions meeting after meeting and everything can change at each meeting
- It is too early to declare success against inflation
- Congress must raise the debt ceiling to protect the economy, and if this does not happen, there will be bad effects on the American economy, and this is the work of Congress, and I do not interfere with it.
- So far, we haven’t reached sufficient levels of hawkishness.
- Naturally, lower inflation leads to weaker growth for the economy.
- The Fed is not considering stopping rate hikes or taking a break from rate hikes between meetings.
- I expect inflation to return to 2% without entering a violent recession.
Markets lower interest expectations
And the markets lowered their expectations for the US interest rate, to fall by the end of the year below 4.4%, and the markets priced the interest rate cut during 2023.
“The process of reducing inflation has begun,” Powell said at the press conference. These words led to a sharp rise in the traditional currencies and stock markets.
