Federal Reserve Chairman Jerome Powell has hinted that the central bank may finally raise rates of interest moments after approving its latest 25 basis-point hike on Wednesday.
Powell cited a “significant shift” within the Fed’s language from its March communiqué that eliminated a key phrase – that additional policy hikes could be appropriate, suggesting a break may be very likely.
Powell’s comments throughout the press conference got here after the commission agreed to a tenth consecutive increase geared toward lowering decades-long inflation.
The 25 basis point hike raised the benchmark federal funds rate to a variety of 5% to five.25%, a 16-year high.
Powell said the commission would follow a “data-driven approach” and noted that inflation “continues to climb at a high level”
He later clarified that “rates might be falling” for a very long time and said that the choice to pause the tightening cycle might be made on the June meeting
The most recent rate of interest hike is available in the identical week that the FDIC stepped in to take over First Republic Bank – marking the second largest bank failure in US history by assets – and sell it to JPMorgan Chase.
![Fed Chairman Jerome Powell at a press conference on May 3, 2023.](https://nypost.com/wp-content/uploads/sites/2/2023/05/NYPICHPDPICT000010547364.jpg?w=1024)
The Fed has been blamed for the growing banking crisis – which also led to the collapse of Silicon Valley Bank and Signature Bank of Latest York – due to how quickly it raised its benchmark rate over the past 12 months.
Powell retracted from this narrative.
“I believe it’s a very good result for the banking system,” Powell said at a press conference on the JPMorgan acquisition.
Asked whether the recent rate of interest hike was restrictive enough, Powell said: “It’s under evaluation.”
Powell acknowledged that the country continues to be liable to recession later this 12 months because the Fed tries to bring inflation all the way down to its 2 percent goal.
Inflation peaked at 9.1% in June – the very best level because the Nineteen Eighties – and stays consistently high.
In March it was 5%.
“We are going to all the time have 2% as our goal,” Powell said, adding that he didn’t think “it can be a smooth process” and that it can “take a while” to succeed in the goal.
![On Wednesday, the Federal Reserve raised interest rates by another quarter of a percentage point.](https://nypost.com/wp-content/uploads/sites/2/2023/05/NYPICHPDPICT000010382153.jpg?w=1024)
Powell also cited wage increases “going all the way down to more sustainable levels” – “which is a very good thing” – and a “50-year low unemployment rate” as positive effects of the Fed’s aggressive drive to curb inflation.
Meanwhile, many banks have tightened their lending standards because the collapse of three major US banks, making it even harder to take out a loan to purchase a house or automotive or expand your online business.