Powell Signals Potential Rate Hikes at Consecutive Meetings: Report

In a recent forum, Federal Reserve Chairman Jerome Powell signaled the possibility of multiple interest rate hikes in the near future, potentially at an aggressive pace, CNBC reports.

Increased Restrictions on the Horizon

According to Powell, the driving force behind these potential increases is a robust labor market. This stance aligns with the position taken by Powell’s colleagues at their June meeting, where they suggested another half percentage point of increases through the end of 2023. The Fed Chair said at the forum, “We believe there’s more restriction coming.”

Consecutive Meetings Could See Hikes

Previously, Powell hinted at the possibility of rate hikes at alternate meetings. However, he now suggests that consecutive meetings could see increases, depending on incoming data. The Fed has been increasing rates at each meeting since March 2022, with a pause in June.

Rate Hikes Haven’t Fully Made Their Impact

The Federal Reserve believes that the ten consecutive rate hikes have not yet fully impacted the economy, leading to uncertainty about whether the policy is “sufficiently restrictive” to bring inflation down to the Fed’s 2% target. Powell also acknowledged the possibility of a downturn, though he does not consider it the most likely scenario.

Banking Stresses and Credit Availability

Regarding banking stresses, Powell mentioned that the issues leading to the closure of Silicon Valley Bank and two other institutions were considered at the last meeting. He emphasized the need to monitor potential issues with credit availability, as recent surveys have shown a general tightening in standards and declining demand for loans.

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