The U.S. economy will likely need a “restrictive” rate for some time, Federal Reserve Chairman Jerome Powell said Wednesday in the press conference after the central bank raised its key rate by 75 basis points for a fourth straight time.
The Fed will take a meeting-by-meeting approach to determining its rate increases.
Update at 2:41 PM ET: Moderating the pace of increases may come at the next meeting or the one after that, Powell said.
“I don’t get any sense that we’ve overtightened or moved too fast,” he also said. “We have more ground to cover.”
“The important question now is how far to go,” he said. “We may ultimately move to higher levels” than were considered in September.
2:46 PM ET: The stock markets have retraced their earlier spike with the Dow +0.4%, Nasdaq -0.2% and the S&P 500 up only 0.1%.
2:47 PM ET: Longer-term inflation expectations appear to have moved back down, but there’s been no clear way identified to show when high inflation expectations are entrenched, he added.
2:50 PM ET: “It’s very premature to talk about pausing the rate hikes,” Powell sald.
He does note that the Fed’s series of rate hikes, up 300 bps before today’s action, has started to impact the economy. Consumer spending has slowed significantly, he said.
“We still have some ways to go,” he said for the Fed to reach its goal of bringing inflation down to 2%.
Developing… check back for updates.
Also see Logan Kane’s take on Fed policy: SPY: The Fed is about to drop the hammer on the stock market
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