WASHINGTON ( Associated Press) – Federal Reserve Chairman Jerome Powell said Wednesday that the central bank is determined to raise interest rates enough to curb inflation, a commitment that has fueled fears that the economy may slide into recession by fighting price increases. may fall.
Powell said future hikes will depend on how fast inflation begins to slow, something the Fed will assess “meeting by meeting”.
“The decision will be based on “the data that comes in and the development of the outlook for the economy,” Powell said in remarks to the Senate Banking Committee, which is part of the Fed’s semi-annual report to Congress.
A week ago, the Fed raised its benchmark interest rate to 0.75 percent, its biggest increase in nearly three decades, to a range between 1.5% and 1.75%. With inflation worsening, Fed officials have forecast a sharper pace of rate hikes this year and three months earlier projected the rate to reach 3.8% by the end of 2023. Highest in 15 years.
Fears are mounting that with inflation running at its highest level in four decades, the Fed will tighten credit to the point of causing a recession. This week, Goldman Sachs calculated that there is a 30% and 48% chance of a recession in the next two years.
Thom Tillis of North Carolina, a senior Republican on the banking committee, on Wednesday accused Powell of taking too long to raise rates and said the short-term benchmark rate should be too high.
“The Fed has largely locked itself into a menu of completely reactive measures,” Tillis said.
At a news conference last week, Powell indicated that the Fed would consider raising between half and three-quarters of a digit at its next meeting in late July. Either will exceed the typical quarter-point increase of the past and reflects the central bank’s efforts to contain inflation as quickly as possible.