US Fed’s Jerome Powell In FOMC Speech: Another Rate Hike Appropriate

US Federal Reserve Chair Jerome Powell delivered his speech in the post Federal Open Market Committee (FOMC) press conference. The FOMC had earlier decided to keep the interest rates steady at 525-550 bps, CoinGape reported.

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Inflation Target In Focus

In his initial remarks, Powell said the current stance of policy is restrictive, while admitting that the Fed has a long way to go before achieving the 2% inflation target. Reiterating the hawkish stance, the Fed Chair said the Fed is determined to do everything it can to achieve goals. He added that the majority of policymakers believe it is more likely than not another rate hike will be appropriate.

Powell explained that the proposal to maintain the current policy stance received unanimous support from policymakers. The Bitcoin price remained largely unchanged in the initial minutes as the Federal Open Market Committee (FOMC) decided to maintain the interest rate steady at the current target rate of 5.25-5.50% in the September 20, 2023 meeting.

The Fed projects that the median PCE inflation would drop to 3.3% by the end of 2023, while projecting further drop to 2.5% and 2.2% in 2024 and 2025 respectively.

Interest Rate Hike In November FOMC Meeting?

The FOMC observed that inflation in the economy remained elevated while the unemployment rate has remained low. Overall, the Fed staff said it prioritizes bringing the inflation down to 2% target over time. The CME FedWatch Tool, which gauges market sentiment on probability of the Fed’s interest rate decisions, currently shows a 36.3% chance of raising interest rate to 5.50-5.75% range in the November FOMC meeting.

On the positive side, Chair Powell said there will be a point in the coming future when it would appropriate to cut interest rates. He stated that the Fed now has the ability to proceed carefully in terms of rate hikes, considering that the inflation target is closer. “We have the ability to move carefully, meeting by meeting.”

Meanwhile, the S&P 500 Index took a drop of 0.30% in response to the hawkish nature of the Powell speech.

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