The Fed will not hesitate to raise interest rates if necessary. Federal Reserve (The Fed) Governor Jerome Powell said that the United States (US) central bank would continue to act cautiously, but would not hesitate to raise interest rates if necessary to control inflation.
Powell expressed this in his opening speech for a panel discussion at the International Monetary Fund (IMF) conference on Thursday local time (9/11) in Washington.
Powell said that policymakers are committed to ensuring interest rates are high enough to return inflation to the 2% target. Powell and his party doubt that they have achieved such a position.
Powell’s comments signal policymakers are not ready to end their tightening comments, even though financial markets and many economists conclude that the central bank is done raising interest rates.
Powell said that the supply-side benefits of the economy, which have helped slow inflation so far may have ended and stronger growth requires further tightening.
Treasuries also continued to suffer losses from a lackluster 30-year bond sale, following Powell’s remarks. The market also shifted the expected time for the first time the Fed will cut interest rates by a quarter point from June 2024 to July.
US central bankers themselves are also assessing whether to raise their benchmark interest rate a little higher, and debating how long to keep interest rates at that higher level.
The Fed will not hesitate to raise interest rates if necessary. The Federal Open Market Committee (FOMC) last kept interest rates at a range of 5.25% to 5.5%, the highest level in 22 years.