Powell: FED Rates Likely to be Higher Than Previously Anticipated

9 March 2023 01:12

During his testimony to the US senate, The Federal Reserve or FED Chairman Jerome Powell reaffirmed, that the fed could increase the size of its interest rate hikes and raise borrowing costs to higher levels than previously projected if evidence continues to point to a robust economy, and persistently high inflation.

In his testimony to the senate banking committee, Powell said 'The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated'.

The FED chair acknowledged that inflation has been moderating in recent months, but added that 'The process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy'.

US inflation as measured year over a year has slowed from its peak in June of 9.1% down to 6.4%, but its progress stalled in January. December to January, the FED's preferred measure of price increases, namely the PCE index, rose by the largest amount in the past seven months.

Powell's hints of higher fed rates for a longer period of time are sparking concerns that the US economy could be slowed significantly or even pulled down to a recession.