Two consecutive rate hike signals from Powell
Fed Chairman Powell spoke at the European Central Bank (ECB) forum in Sintra, Portugal.
Powell, in response to the question of whether Fed officials will raise interest rates at other meetings after they left interest rates unchanged in the last meeting, said that this “may or may not happen”, and stated that they will not ignore the successive rate hikes.
On the other hand, Powell reiterated that the forecasts of most policy makers expect at least two consecutive rate hikes this year.
Fed officials left interest rates unchanged for the first time after a 15-month rate hike to assess how high borrowing costs and the recent banking crisis have impacted the economy. But Powell and most Fed members have signaled that further tightening will eventually be needed to rein in inflation, which is twice the bank’s 2 percent target.
Fed keeps interest rates steady after 15 months
After 15 months of tightening, the Fed decided to keep the policy rate constant at the 5-5.25 percent band after the meeting held on June 14.
In the decision text, the authorities updated their interest rate expectations for 2023 upwards, and made upward revisions in the economic projections on the growth and inflation side. On the other hand, the expectations reflected on the dot chart also indicated that interest rate hikes are on the table in the upcoming period. Fed officials’ interest rate expectation for the end of the year was determined as 5.6 percent. In the previous estimate, this was recorded as 5.1 percent.
