Federal Reserve Chairman Jerome Powell said the Fed cares more about its anti-inflation target rate than it does about how quickly it keeps raising rates.
Although Powell opened the door to slowing the pace of Fed hikes, and possibly raising rates by half a point in December instead of another three-quarters point, he indicated that the Fed still had a long way to go before interest rates rose significantly. Adequate. To reduce inflation to comfortable levels.
“We believe there is ground to be covered before we pass this test,” Powell said. “That’s why we say continued increases in interest rates would be appropriate…we may move to higher levels than we thought.”
Powell reiterated that the Fed takes into account the fact that it is flying somewhat blindly: the economic impact of monetary policy takes time.
“That’s why I said it’s appropriate to slow the pace of the increases,” Powell said. “So that time is coming. It may come as soon as the next meeting or the next one. No decision has been made.”
But Powell made it clear that “the question of when to adjust the pace of the increases is now much less important than the question of how high interest rates will be and how long to keep monetary policy tight.” In other words: even if the Fed slows down raising interest rates, it will continue to raise rates for some time.
