Chairman Jerome Powell said policymakers have already done “most of the work” after raising rates from near zero since last year. Credit: Mandel Ngan/AFP
The Federal Reserve Chairman warned that the fight to contain inflation is not over as the US central bank raised interest rates to the highest level since 2001.
Politicians voted to raise interest rates by a quarter of a percent to 5.25-5.5%, increasing pressure on the Bank of England to do more to curb soaring inflation.
U.S. stock markets rose after the as chairman Jerome Powell said policy has already covered “the bulk” after raising rates from near zero since last year.
However, he left the door open for further rate hikes, adding that there is “a long way to go” before policymakers can be sure they have beaten inflation.
Mr. Powell said the Fed's forecasts are no longer reflect the world's highest economy sliding into recession this year, adding that this means there will be no interest rate cuts in 2023.
He said: “My base case is that we can bring inflation down to the target level without a really big downturn, which usually results in the high levels of job losses that we have seen in the past.”
< p>Fed chairman said future decisions will be made “meet after meeting”, adding that officials are “strongly committed” to bringing inflation down to 2% target largest economy in the world.
But speaking on Wednesday, Mr. Powell said: “I would say that it is certainly possible that we will raise funds again at the September meeting if the data is justified, and I would also say that perhaps we would prefer remain stable in this meeting.”
The Dow Jones Industrial Average continues its longest streak since January 1987 as recession fears eased, while the S&P 500 rose on Powell's comments.
Fed action once again drawing attention to Threadneedle Street, which is under increasing criticism for failing to control inflation.
US prices rose 3% in the year to June. This is the lowest reading in two years, below a peak of over 9% a year ago.
Inflation in the UK, by contrast, was 7.9% over the same period, highlighting the challenge facing the Bank of England. as he struggles to keep prices down.
UK policymakers are expected to raise rates for the fourteenth consecutive week from 5% to 5.25%, with financial markets betting that that the rates will reach 5.75%. end of this year.
Last month, the proposed Fed rates will also reach 5.75% before the end of the year. Investors are betting that the US central bank will start cutting rates in 2024 to support jobs and spending.
U.S. unemployment also remains at a record low of 3.6%. Official data on Thursday is expected to show that price increases are also slowing due to the Fed's preferred measure of inflation, which takes into account spending by rural and urban households across a range of broader measures.
Analysts say the decline is easing. inflation and a more fragile economy meant that this was likely the end of the rate hike cycle. James McCann, deputy chief economist at asset management firm Abrdn, said: “We think today's move is likely to be the last in this tightening cycle.” his desire to gather more information about activity and inflation before potentially tightening policy. And by November, we believe a weaker economic background will prevent further adjustment.”
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