US Fed chief says interest rate hikes could ease 'as soon as December'
Jerome Powell
Infusing hope in the economy, Federal Reserve chair Jerome Powell said Wednesday that the central bank could ease its pace of interest rate hikes "as soon as" December. Amid soaring prices, the Fed has taken several steps to tame inflation that has hit levels not seen since the 1980s.
It has all the while tried to avoid pushing the United States into a recession.
"The time for moderating the pace of rate increases may come as soon as the December meeting" of Fed policymakers, Powell said in a speech at the Brookings Institution think tank.
Monetary policy affects the economy and inflation with "uncertain lags," he said. "Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down."
Also Read |Powell says higher interest rates will bring down inflation, but also inflict 'pain' on Americans
After Powell's announcement, the Nasdaq jumped three per cent. The Nasdaq Composite Index was up 2.9 per cent at 11,305.08 as Powell indicated that the Fed could soon shift from its ultra-aggressive response to inflation.
He also warned that its policy will likely have to remain tight "for some time" to restore price stability. He added that the Fed plans to "stay the course until the job is done," saying that loosening policy prematurely might lead to problems.
The central bank has raised the benchmark lending rate by 0.75 percentage points four consecutive times in recent months, out of six rate hikes this year in an aggressive effort to rein in prices.
The latest increase in November took the benchmark lending rate to 3.75-4.0 per cent, the highest since January 2008.
The current picture suggests that there are early signs that prices are cooling. However, annual consumer inflation remained at 7.7 per cent in October.
Powell said Wednesday that inflation remains "far too high," and there is still a need to raise interest rates to a "sufficiently restrictive" level.
Powell also expressed hope of "a path to a soft or softish landing," referring to a scenario where unemployment rises but the country avoids a severe recession.
"I think that's very plausible," he said.
(With inputs from agencies)
WATCH WION LIVE HERE
You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.
