Fed Chair Jerome Powell said the ultimate level of interest rates would have to be higher than was thought a few months ago – and that he tried to keep any talk of rate cuts off the table. Powell laid out three components to watch during his speech.
Federal Reserve Chairman Jerome Powell indicated Wednesday the central bank may decide to raise interest rates at a slower pace at its next policy meeting.
While slowing the pace of interest rate hikes is dovish, Powell tried to balance his message by making make two hawkish points. For example, economists at Goldman Sachs now expect the Fed to slow the pace of rate hikes to 50 basis points in December, followed by three 25 basis point hikes in February, March and May, raising the benchmark rate to a peak of 5%-5.25%.
“It will take substantially more evidence to give comfort that inflation is actually declining,” he said.First of all, the prices of core goods should begin to exert downward pressure on overall inflation in coming months, the Fed chairman said.“As long as new lease inflation keeps falling, we would expect housing services inflation to begin falling sometime next year,” he said.
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