The Federal Reserve could step up its interest rate hikes and raise borrowing costs more than previously projected if evidence continues to point to a robust economy and stubbornly high inflation, US central bank president Jerome Powell says in Comments prepared for a Senate panel.
“The latest economic data is stronger than expected, suggesting that the eventual level of interest rates will likely be higher than previously anticipated.”says Powell in testimony before the Senate Banking Committee.
“Should the totality of the data indicate that more credit tightening is needed, we stand ready to increase the pace of rate hikes.” The Fed raised its benchmark interest rate by 25 basis points at the beginning of February after raising it 50 points in December and 75 before that.
In the last year, The central bank has raised rates eight times, which affect many business and individual loans.Most Wall Street economists and investors expected the bank to apply another quarter-point hike at its next meeting on March 21-22.
But in recent days, traders have calculated that the increase may be half a point, according to futures markets.
Powell’s comments suggest that a half point increase in March is a possibility.In his remarks prepared for Tuesday, Powell modified his bullish comments on inflation made after the bank’s meeting on February 1, when he said that “the disinflationary process has begun” and made several references to a “disinflation”.
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