Powell – “We Expect Ongoing Hikes”
Despite the Federal Reserve’s aggressive rate hiking campaign, the central bank has more work to do, according to Fed Chair Jerome Powell.
“I would say that our focus is not on short-term moves but on sustained changes to broader financial conditions,” he said during Wednesday’s press conference. “And it’s our judgment that we’re not yet at a sufficiently restrictive policy stance, which is why we say that we expect ongoing hikes.”
Powell – Fed Could Conduct a Few More Rate Hikes
Fed Chairman Jerome Powell said the central bank could conduct a few more rate hikes to bring inflation down to its target range.
“We’ve raised rates four and a half percentage points, and we’re talking about a couple of more rate hikes to get to that level we think is appropriately restrictive,” Powell said. “Why do we think that’s probably necessary? We think because inflation is still running very hot.”
Powell – Too Early to Declare Victory on Inflation
Inflation is easing in some areas of the economy but it’s too early for the Federal Reserve to say the battle’s been won, said Fed Chair Jerome Powell.
“It would be premature,” he said. “It would be very premature to declare victory, or to think that we’ve really got this.”
The disinflation process, he said, is in its early stages, but the “job is not fully done.” Core services excluding housing have yet to experience disinflation, he added.
Powell also expects inflation to continue moving up in housing services, before moving down.
Powell says Disinflationary Process has Started
“We can now say I think for the first time that the disinflation process has started. We can see that and we see it really in goods prices so far,” Fed Chairman Jerome Powell said at a news conference Wednesday.
Powell Acknowledges that it is ‘Certainly Possible’ Fed Funds Rate Stays Below 5%
Powell said he thinks the Fed can get inflation back down to 2% “without a really significant downturn, or a really significant increase in unemployment.”
He also added that it is “certainly possible” that the Fed will keep its benchmark interest rate below 5%. The Fed’s latest hike brings that Federal funds rate to a range of 4.50% to 4.75%.
Powell Expects Growth at a ‘Subdued Pace’ in 2023
Fed Chair Jerome Powell is bracing for growth this year, albeit at a “subdued pace.”
“My base case is that there will be positive growth this year,” he said.
Powell Says, Don’t Expect a Rate Cut in 2023
Jerome Powell said he doesn’t expect the Fed to cut rates this year, as some major strategists project, according to CNBC.
“Given our outlook, I don’t see us cutting rates this year, if our outlook comes true,” the Fed chair said.
Powell also said he was “not concerned” about the bond market implying one more cut before a pause, because some market participants are expecting inflation to fall faster than the Fed does.
“If we do see inflation coming down much more quickly, that will play into our policy setting, of course,” Powell said.