Federal Reserve Chair, Jay Powell, addressed the International Monetary Fund in Washington, stating that monetary policy is currently in “restrictive territory” and is applying downward pressure on inflation. Although the economy exhibited robust performance in the third quarter, Powell cautioned that the Fed will not be swayed by temporary spikes in economic data. Nevertheless, the central bank is keeping the possibility of further interest rate hikes open. Amid economic uncertainties, Powell emphasized the importance of a cautious and methodical approach.
In light of job growth slowdown and with the unemployment rate at its highest since 2021, the Fed continues to weigh the decision on whether to take further action on interest rates. While many investors don’t anticipate additional rate hikes, the majority of the rate-setting committee has penciled in one more rate hike this year.
Federal Reserve Governor Michelle Bowman and Minneapolis Fed President Neel Kashkari indicated a stance supporting further tightening of rates, expressing concerns over persistent inflation. Richmond Fed President Tom Barkin similarly remained skeptical about inflation reductions, suggesting that there’s still a need to closely monitor the data and monetary policy.
On a more dovish note, Philadelphia Federal Reserve President Patrick Harker and Atlanta Fed President Raphael Bostic expressed an inclination toward maintaining steady rates amidst strong economic growth. Powell echoed the complex nature of achieving the Fed’s inflation target, highlighting the challenges in achieving a sufficiently restrictive stance to combat inflation.
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