Fed Chairman: Raise interest rates stronger if the job market remains “hot”
Fed Chairman Jerome Powell reaffirmed his stance that interest rates need to be pushed higher to contain inflation.
|Mr. Jerome Powell, Chairman of the US Federal Reserve (Fed). Photo: Reuters
This position was reaffirmed by the Chairman of the US Federal Reserve (Fed), Mr. Jerome Powell during an event in Washington on February 7.
The Fed chair said lending rates could hit a higher mark than traders and policymakers expected.
The event “The Economic Club of Washington DC” on February 7 was the first exchange of the Fed chair since February 1 – the time the Fed announced the decision to raise interest rates by 0.25 percentage points.
“We think we’re going to need to raise rates further,” Mr. Powell said at “The Economic Club of Washington DC” Q&A session, adding: “The labor market is going strong. “.
If the job market is still hot, then “maybe we have to do more,” he said.
Data released by the US government last weekend showed that employers added 517,000 new workers in January, while the unemployment rate fell to 3.4%, the lowest level in nearly 55 years, calculated. since 1969.
Mr. Powell said that the information on the labor market “shows why we think this is going to be a long process”.
A wave of bond sell-offs quickly emerged after the recent rally when the Fed Chairman signaled a higher interest rate hike in 2023 if the job market showed no signs of cooling down. Stock The US on February 7 also “turned the wheel” after the Fed Chairman’s speech at “The Economic Club of Washington DC”, but still managed to close the session up.
According to Mr. Powell, the highest average interest rate is expected to be 5.1%. This is considered a “soft ceiling” and the Fed Chair seems willing to look at more data and raise interest rates higher if necessary.
Last week, the Federal Open Market Committee (FOMC) – the Fed’s policymaking body – raised the base rate by 0.25 percentage points, to the threshold of 4.5 – 4.75%. In December 2022, the Fed also had a similar move to slow down interest rate hikes with an increase of 0.25 percentage points, after four increases of 0.75 percentage points during the year.