The Fed is likely to raise interest rates in the coming months. However, it will do so at a slower pace than before, Federal Reserve Chair Jerome Powell said, The Wall Street Journal reports.<\/p>\n
On June 14, for the first time since March 2022, the central bank held<\/a> the policy rate range at 5-5.25%.<\/p>\n “Given how far we have come, it may make sense to raise the parameter, but at a more moderate pace,”<\/em> \u2014 Powell said.<\/p>\n<\/blockquote>\n The head of the \u0424\u0420\u0421<\/span> compared the latest decisions to a driver who, having left the highway, is travelling at a slower pace to avoid overshooting the destination.<\/p>\n The outlet noted that inflation<\/a> and economic activity this year have slowed less than many officials expected. This has increased uncertainty about how much the Fed can tighten policy.<\/p>\n Officials see a risk that past rate increases, combined with recent stress in the banking sector, could produce a GDP growth slowdown more abrupt than anticipated. They are trying to balance this against the risk that the economy proves more resilient than expected and inflation remains too high, which would necessitate further tightening.<\/p>\n The Fed’s projections imply two more rate hikes this year. Powell described it as “appropriate provided the economy performs as expected”.<\/p>\n “The Committee will be making decisions meeting by meeting, based on the totality of incoming data,”<\/em> \u2014 Powell explained.<\/p>\n<\/blockquote>\n According to the CME FedWatch tool, the probability of a July rate increase stands at 71.9%<\/a>. A month ago the market priced it at 32.9%.<\/p>\n The Fed’s stance was influenced by collapse of Silicon Valley Bank<\/a>, which raised doubts about the resilience of several regional banks. In the minutes of the March meeting, some committee members questioned the advisability of further tightening. Bank failures could complicate the Fed’s task, the WSJ notes.<\/p>\n\n
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