Washington, Dec 1 (EFE). – The president of the Federal Reserve (Fed), Jerome Powell, said on Friday that it would be “premature” to conclude that the Fed has raised interest rates “enough” to firmly contain prices.
“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” said the president of the US central bank at an event at the Spelman Atlanta College.
The Fed chairman emphasized that decisions will be made based on incoming information, as he said “the data will tell us whether we’ve done enough or whether we need to do more.
The restrictive monetary policy, he explained, is putting downward pressure on economic activity and inflation.
“Monetary policy is thought to affect economic conditions with a lag, and the full effects of our tightening have likely not yet been felt,” he noted.
Although inflation fell half a point in October, after rising or stagnating since June, to 3.2%, Powell said the drop was not enough, as it was far from the desired 2%.
“We are making decisions meeting by meeting, based on the totality of the incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks,” he stressed.
Powell added that the Fed believes inflation is still “above target” but “moving in the right direction” and therefore “the right thing to be doing now is to be moving carefully, thinking carefully about how things are going on, letting the data tell us what the story is.”
There are two weeks left before the Fed holds its final policy meeting of 2023, after which it could decide to raise rates again or leave them unchanged, as it did in November.
Rates are now between 5.25% and 5.5%, their highest level since 2001.
The Fed has not ruled out another hike before the end of the year at its December 12-13 meeting, as the economy shows no signs of cooling, quite the opposite.
Core inflation, a key measure used by the Federal Reserve to make interest rate decisions, fell by a tenth to 4% in October from a year earlier.
Regarding the labor market, another key piece of information, job creation slowed significantly to 150,000 new jobs, 147,000 less than in September, and the unemployment rate rose a tenth to 3.9%.
According to the minutes of the last Fed meeting, the members of the Federal Open Market Committee (FOMC) agreed that it is necessary to “proceed proceed with caution” when considering possible new interest rate hikes and that the decision will be based on the totality of incoming economic information.
In addition, all participants agreed that it would be appropriate for policy to remain restrictive for some time until inflation moves closer to the 2% target. EFE