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Powell projects another hike.
The Federal Reserve stepped up on Wednesday his fight against the worst inflation of the last 40 years in the United States, raising his short-term reference interest rate by half a percentage point, and indicated He said that there would be more increases in the near future.
With the increase, the short-term interest rate was placed at a higher level. in the range of 0.75% and 1%, the highest point since the arrival of the pandemic two years ago.
The Fed also announced which will start to reduce its huge balance sheet of $9 trillion, made up mostly of Treasury and mortgage bonds. Reducing these assets will take the effect of further increasing credit costs throughout the economy. With food, energy, and consumer prices accelerating, the Fed’s goal is to cool spending—and economic growth—and keep it cool. by making loans more expensive for individuals and businesses. The central bank hopes that the higher cost of mortgages, credit cards and auto financing will slow spending enough to tame inflation, but not enough to create a recession.
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It will be a delicate balancing act. The Fed has been widely criticized for taking too long to tighten credit, and many economists have expressed skepticism that a recession can be avoided.
Further hikes< br /> At a press conference on Wednesday, Fed Chairman Jerome Powell of course there will be plus sizeable increases in interest rates. He said additional half a percentage point increases in the Fed’s key rate “should be under consideration at the next couple of meetings,” scheduled for June and July. .