Key Points:
Powell stressed in comments Wednesday that he and the other members of the rate-setting Federal Open Market Committee anticipate hiking interest rates further to reduce inflation. The only concession he made was that the Fed does not seem to be moving at the rapid speed that characterized the previous ten rate rises since March 2022.
“Given how far we’ve come, it may make sense to move rates higher but to do so at a more moderate pace,” he said during a question-and-answer session with committee members.
Committee members grilled Powell on a range of other issues, including the March financial crisis. He admitted that the Fed’s regulatory and supervisory policies need to be strengthened.
Powell has ruled out any interest rate decreases in the foreseeable future, claiming that the economy’s inflation was consistently more persistent than predicted. He expects two more rate hikes in 2023 to be appropriate.
“We don’t see that (interest rate cuts) happening any time soon. The test for that is that we are confident inflation is moving back down to our two per cent goal. I think by the end of 2024 the median participant would vote for some rate cuts.”
Nonetheless, his statement caused some anxiety in the cryptocurrency market, with Bitcoin hovering just below the $30,000 barrier but quickly recovered afterward.
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