【ARCFE Finance】 POWELL PLEDGED TO REDUCE INFLATION, FED ON TRACK FOR ANOTHER 0.75 PERCENTAGE POINT INCREASE
09/07/2022 by ARCFE U.S.
In his speech in Jackson Hole on August 26, Fed Chairman Jerome Powell emphasized on the central bank’s efforts and commitment in tackling record-high inflation by raising interest rates. His strong tone has placed him among officials who favor a more aggressive approach to fighting inflation, and has in-turn reinforced market expectations of Fed’s third consecutive 0.75 percentage point rate rise ahead of their meeting later this month. Previously in July’s FOMC meeting, Mr. Powell has also suggested that the Fed was not likely to slow down interest rate increases until inflation falls closer to their long-term 2% target.
Numerous Fed officials have signaled that they want to target a 4% interest rate by year’s end, or 1.5 percent point higher than the current level, in which both are accomplishable through increases in the remaining three FOMC meetings of this year. Essentially they want to convey the message that combating inflation is more important than supporting growth at this point, as the economy doesn’t work for anyone if there’s no price stability. Analysts pointed out that the market could be looking at 0.75 percentage point increase in the September meeting, followed by two smaller increases.
The next FOMC meeting is scheduled for September 20-21, 2022.
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