May 17, 2021

Powell (Fed) changes the tone and anticipates fewer rate hikes

Powell (Fed) changes the tone and anticipates fewer rate hikes



In a speech delivered in New York, the president of the United States monetary authority has assured that interest rates are currently "below" what is considered a "neutral" level for the economy. That is, it does not accelerate or hinder growth.

These words imply a change of tone since, a month ago, Powell affirmed that the interest rates were "quite far" from being at a neutral level.

At its meeting on November 8, the Federal Open Market Committee (FOMC) of the Federal Reserve decided to keep interest rates unchanged in an objective range between 2% and 2.25%. , after three increases so far this year.

The market, and the Fed's own expectations, still anticipate that there will be an additional increase in 2018, raising rates to between 2.25% and 2.5%.

"We know that things can sometimes differ even from the most careful forecasts," Powell said. "Our gradual policy of raising interest rates has been an exercise in balancing risks," added the Fed president.

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