2023-06-29 06:31:49
Federal Reserve Chairman Jerome Powell said on Thursday that it would likely take at least two more interest rate hikes this year to bring inflation down to the central bank’s 2% target. .
“The majority of participants expect two or more interest rate hikes by the end of the year would be appropriate,” Powell said of the Federal Open Market Committee (FOMC). It remains high and the process of pushing inflation back to 2% is still a long way off.”
of the Bank of Spain (central bank) in MadridmeetingThe content of the remarks prepared for the FOMC reiterates what the chairman said two weeks following the FOMC meeting on the 13th and 14th, when it was decided to keep interest rates unchanged for the first time in 1 year and 3 months.
Fed officials said at a meeting this month that two more hikes by the end of the year might be appropriate, while a pause was taken to assess the economic impact of previous tightening and stress in the banking sector. was suggesting.
Powell said, “We are seeing the effects of the tightening of monetary policy on demand in the economic sectors most sensitive to interest rate trends, such as housing and investment.” It will take time for the full effect to be realized,” he said.
Since March last year, the US Fed has tightened the interest rate at a rapid pace from virtually zero interest rates, and has also raised the interest rate by 0.75 percentage points for four consecutive meetings. After that, the pace began to slow in December last year, raising interest rates by 0.25 percentage points for three consecutive meetings until May this year, and the target range for the Federal Funds (FF) rate is now 5-5.25%.
The U.S. Consumer Price Index (CPI) has slowed significantly from its 9.1% year-on-year peak a year ago, but the core index, which excludes volatile food and energy, has slowed much more. It’s slow, and officials like Powell are watching the “rigidity” of core inflation.
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The chairman also said that as a bank regulator, including the Federal Reserve, it is committed to learning lessons from the failures of three US regional banks, including Silicon Valley Bank (SVB). While the largest banks are well-capitalized and secure, the size diversity of the U.S. banking system needs protection and may require stronger supervision of midsize banks and nonbanks.
“These events suggest that there is a need for greater supervision and regulation of financial institutions of the same size as the SVB,” Powell said. said.
At the Fed, Vice Chairman Barr, who is in charge of banking supervision, is currently in the process of reviewing banking regulations, and is expected to present reform proposals soon. Powell made similar remarks in congressional testimony last week.
The Fed’s rate hikes combined with stress in the banking sector might lead to a further tightening in credit conditions, he said, but the extent of that was not yet known.
He also acknowledged that while the U.S. labor market remains tight, there are some signs that the balance between supply and demand is improving.
Original title:Powell Says Two or More Hikes Likely Needed to Cool Inflation(excerpt)
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