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Fed is prepared to raise rates further if needed, despite progress: Powell

Published 08/25/2023, 10:34 AM
Updated 08/25/2023, 10:24 AM
© Reuters. -- The Federal Reserve is prepared to continue raising interest rates until it is convinced inflation is headed toward its 2% target, according to Chair Jerome Powell, who spoke Friday morning from the central bank’s annual meeting in Jackson Hole, Wyo.

While inflation is down from its peak, which Powell called a welcome development, “it remains too high,” he said. 

“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

U.S. stocks were holding early gains as Powell began to speak. Stocks have surged this year on the hope the Fed was coming close to the end of its rate hiking. The S&P 500 is up 14% so far this year, and the NASDAQ Composite is up 29%. since the beginning of January.

There is still room for the Fed to hold steady on rates at the next rate policy meeting in September, however. “Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” he said.

Powell said the process still has a long way to go despite recent favorable economic data that showed prices cooling. 

“At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks,” Powell said. “Based on this assessment, we will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.”

Futures markets continue to see the Fed holding rates at their current range of 5.25% to 5.50%. Traders put a 78% probability of a pause at the Fed’s September meeting, with a 43% probability of another rate increase in November.

Latest comments

While you think EVEN higher rates are needed, remember, as these companies are paying outrageous rates for their money, they are passing it to the consumer in every possible way........hence even more inflation.  STOP your hikes for a meaningful amount of time to see where we land, before everything is destroyed.
Fed is overdoing this until it really hurts bad for economy and workers..not getting soft landing if you gut the consumers
does it matter another 0.25% if already at 5.5%?
Until they start blowing a way small banks.
In fact, neither Index is up in Real Terms year on year, both below CPI. The choice here is steady puncture till -70% Flat or a Crash to -40% and despite the latter being preferable, the Fed and the Media will steer matters into the longest Stagflationary Period with Technological Deflationary elements until the only solution is deployed - Financial Repression and Yield Curve Control. Japan first, then EU, then UK then USA. In a word its FCKD.
US federal prepare to investigate these media keep reporting fake news
Prepared to raise rates yes, but also talking about the need to take it slow due to lag in the economic indicators.
Sounds like the speech was interpreted as no more rate hikes. Just keep fighting the FED. NASDAQ won't take much more as the 2YR yield continues to rise.
Progress yes, but far from under control. Wages keep increasing as do many raw materials coupled with energy price hikes and medical hikes. Inflation is FAR from under control.
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