Fed Chair Powell truly has a flair for the theatrical. As he participated in a panel discussion titled “Monetary challenges in a global economy: at the Jacque Polak Annual Research Conference in Washington DC, his statements were quite shocking. Even though climate activists pushed Fed Chair Powell off the stage shouting “End fossil finance”, that was not the icing on the cake of the evening. As Fed Chair Powell spoke about his views on the inflation matter and fed funds rate, it has left attendees shocked.
Iterating the Federal Reserve’s views on the tightening interest rates, they had suggested that they might be increasing the benchmark rate over its current 22-year high however is that the whole story?
Fed Chair Powell Speaks:
The Federal Reserve Chair, Jerome Powell, was among numerous FED officials who spoke Thursday, emphasizing that the Fed just paused rather than terminated its anti-inflation interest rate raise campaign when it maintained rates steady at its last week’s meeting. So in hindsight, the Fed could squeeze inflation and the economy a lot hard with more rate hikes if the inflation doesn’t fall toward the Fed’s goal of a 2% annual rate, Powell and others said.
Jerome Powell speaking at a conference of the International Monetary Fund in Washington said
“We recognize that continued progress toward our 2% target is not guaranteed, and inflation has given us a few head fakes.” We will not hesitate to tighten policies more if it becomes necessary.”
However, other members of the FED had opposing views on the matter.
Michelle Bowman, a governor at the Fed, in a session with bankers in Florida, gave a prepared statement which went something like this.
“While I still assumed we would need to raise the federal funds rate to get inflation to 2 per cent on time, I supported the FOMC’s decision in recent weeks to keep the federal funds rate target within the target range. of course at current levels as we continue to evaluate incoming information and its impact on future prospects.”
Kathleen O’Neil Paese, the interim president of the Federal Reserve Bank of St. Louis said that she favoured a wait-and-see approach whilst staying willing to raise rates again if it was required.
She said,
” We can relax and wait for more information before deciding that further policy tightening is appropriate. However, if the progress toward achieving 2% inflation stalls, I believe that the Committee should act promptly to ensure that the high inflation does not become entrenched.”
Along with her, Patrick Harker, the president of the Federal Reserve of the Bank of Philadelphia, advocated for sustaining the current momentum due to the effect that high interest rates are having on the economy. While giving a speech at Northwestern University he went on to say
“This economy has proven to be resilient and sometimes unwilling to bend to the will of economic models, but I believe that the path we are on is the right one. I am not easily swayed by one month’s data.”
With inflation still looming around the corner, the Federal Open Market Committee, which decided interest rate moves isn’t yet ready to declare victory waiting to see what future inflation reports say before making any other big moves.
Future Outlook from Commodity Samachar:
Amidst this new revelation, the Head of Research at Commodity Samachar, Mr Ankit Kapoor had this to say.
” A sudden increase in interest rate tightening is not expected anytime soon, however, if they want to increase it might be increased maximum to 6 bps and it might happen before March 2024. In the event, that they increase the rates before December, there could be chances that investors and traders could witness a recession in the first quarter of 2024. However, with an election year approaching, data will have to be scrutinized and analysed properly to understand.
Concerning gold and silver, in the event of further tightening, investors as well as traders can witness upside movements due to the immense pressure put on them. “
Commodity Samachar
Learn and Trade with Ease
Also Read: World News | Middle East Tensions Rise: Is the US on the Verge of War Once Again?, World News| The Nuclear Trio: Russia, China, & US Under The Spotlight
Recommended Read: The Federal Reserve: Global Market Influence & Strategies To Tackle The Phenomenon