The Fed Chairman anticipated that US rates could rise even higher

2023-08-25 17:08:00

The president of the United States Federal Reserve, Jerome Powellrevealed this Friday that the entity “is prepared” to continue raising interest rates if necessary, in the face of inflation that is still “very high”.

“We are prepared to raise rates further if appropriateand we intend to keep the policy at a restrictive level until we are confident that inflation is moving substantially toward our target2% per year,” he said following the annual meeting of central bankers in Jackson Hole, Wyoming.

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Since March 2022, The agency implemented eleven rate increases and, following a new increase of 25 percentage points last month, they are currently in a range of between 5.25% and 5.5%a maximum since January 2001. And everything indicates that, before the end of the year, there will be a new percentage increase.

For his part, the last Consumer Price Index (CPI) American registered an increase of 3.2% in July, above the Fed’s targetalthough far from the peak of 9.1% in June last year. “There is still a long way to go, despite the latest positive figures,” he said.

“In the next monetary meetings we will be in a position where we will proceed carefullyanalyzing the prospects and risks,” he concluded, according to the agency bloomberg line.

Stocks fall in anticipation of Powell’s speech

It will be necessary to see what will be the reaction of the markets before these declarations of the president of the FED. The truth is that, in the run-up to them, there was a lot of anxiety on the part of the markets.

This Thursday, the US stocks closed lower to the expectation to the definitions of Jerome Powell.

During the day, the S&P 500 lost -1.35%; while the Nasdaq Composite (CCMPDL) fell -1.87%. Tech companies came under pressure from the falls of Tesla Inc. (TSLA) and Apple Inc. (AAPL), of at least -2.6% each.

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One of the companies that might not materialize its good moment was Nvidia Corp., that slashed an advance that took the company to an all-time high and ended up just 0.1% higher.

“It was a bad day for the international markets, the indices fell more than 2%”said Jose Pavesaa member of Bull Market Brokers, in dialogue with Canal E. “The members of the FED said that they were going to have to maintain rates longer than expected to reduce inflation and that scares investors”, he added.

RS / LR

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