NEW YORK (Reuters) – Federal Reserve Chairman Jerome Powell said on Friday it was not yet clear whether interest rates would rise further as central bank officials weighed in on uncertainty about the effect of previous hikes and recent bank lending. Let’s balance the scarcity with this fact. It is becoming difficult to control inflation.
In carefully worded remarks at the Fed research conference where Powell was interviewed by a senior central bank official, the Fed chief reiterated that the Fed would now make decisions “on a meeting-by-meeting basis.”
He also said that after a year of aggressive rate hikes, the Fed “may look to the data and the changing outlook to carefully assess.”
“We face uncertainty about the waning effects of the tightening so far and the extent of credit tightening from recent banking stress,” Powell said.
“So today, our guidance is limited to identifying the factors that we will look at as we assess to what extent additional policy tightening may be appropriate to bring inflation back to 2%,” he said.
“The risk of doing too much or doing too little is increasingly being balanced, and our policy is making adjustments to reflect that,” Powell said.
He remarked that ahead of the June 13-14 monetary policy meeting, “we have not made a decision about the extent to which further policy tightening would be appropriate.”
Fed officials are undecided about their next decision, and Powell’s appearance on Friday was a moment that could bring clarity. But the central bank will still receive key employment and inflation data in the coming weeks that could influence the debate.
But the Fed also faces other hurdles. Regardless of the data, the Bank is unlikely to raise rates if the political impasse over the federal debt limit remains unresolved.
If the result is a true US debt default, the central bank could also be pushed into emergency measures to ease the burden on the economy.
