The Fed is not sure that it has raised interest rates enough

The Chairman of the Federal Reserve (FED) Jerome Powell said that he is not sure that the American regulator has raised rates sufficient interest enough to bring inflation down to the target of 2%.

“The Federal Open Market Committee (FOMC) is committed to achieving a monetary policy stance that is restrictive enough to reduce inflation to 2% over time, and we are not confident that we have reached that stance,” Powell said at a fiscal policy roundtable organized by of the International Monetary Fund (IMF).

Therefore, if “it becomes appropriate to further tighten policy,” Powell said, the Fed will not hesitate to do so. He has made eleven increases so far, and the rates range from 5.25% and 5.5%which is the highest level since 2001.

The Fed will also maintain “that level until the job is done,” Powell said.

Possible new increases
As for possible new hikes, the Fed will continue “act with caution” in order not to be “fooled by a few good months of economic data” or to “over-adjust”.

“We make decisions from meeting to meeting based on the totality of incoming data and its implications for the outlook for economic activity, inflation and inflation, as well as the balance of risks,” he said.

Last week, federal reserves decided to take a break in interest rate increases, the second consecutive pause after the eleven increases he made since March last year, although he did not rule out raising them again if the situation required.

Therefore, it could be that the Fed decides to increase the number of meetings before the end of the year, on December 12 and 13.

Inflation is significantly lower
From March 2022 to June this year, the FED’s Federal Open Market Committee – the body in charge of monetary policy – ​​has decided to raise interest rates.

After a pause in June, they increased again in July and in September and October rates remained unchanged.

Inflation is already significantly below the peak it reached in June 2022, when it was 9.1%, but still at levels that are not desirable. The September rate was 3.7%.