Do you think interest rate hikes will start to ease soon? Read more:
Chair Jerome Powell signaled the U.S. Federal Reserve will slow the pace of interest-rate increases next month, while stressing borrowing costs will need to keep rising and remain restrictive for some time to beat inflation.
The Fed’s actions -- the most aggressive since the 1980s -- have lifted the target range of their benchmark rate to 3.75 per cent to 4 per cent from nearly zero in March. Powell said rates are likely to reach a “somewhat higher” level than officials estimated in September, when the median projection was for 4.6 per cent next year. Those projections will be updated at the December meeting.
There hasn’t been enough strong evidence to make a convincing case that inflation will soon decelerate, he said. Powell then launched into a discussion of service costs, focusing on scarce supply in the labor market, with the gap in labor-force participation mostly explained by pandemic-era retirements in his view.
Powell’s remarks come as the Fed prepares to enter its pre-meeting blackout period at the end of the week.
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