(Finance) – The chairman of the Federal Reserve Jerome Powell he stated that it is not yet clear whether interest rates will need to rise furtheras US central bank officials find themselves balancing uncertainty about the impact of past increases in the cost of borrowing with the recent tightening of bank credit and the fact that inflation is proving hard to bring under control.
“We face uncertainty about the lagged effects of our tightening so far and the extent of the credit crunch due to recent banking stresses,” Powell said at a central bank conference in Washington. guidance simply identifies the factors that we will monitor as we assess the extent to which further policy tightening might be appropriate to bring inflation back to 2%”.
“THE risks of doing too much or too little are becoming more balanced and our policy has adapted to reflect that,” he added. Ahead of the June 13-14 policy meeting, “we have not made any decisions on the extent to which further tightening of the policy will be appropriate.”
Powell recalled that i problems at Silicon Valley Bank and other banks could still have an impact on the economy: “Financial stability tools have helped calm conditions in the banking sector. Developments there, on the other hand, are contributing to tighter credit conditions and they will likely weigh on economic growthon hiring and inflation”.
“So as a result, our policy rate may not need to rise as much as it otherwise would have to to meet our targets,” he added. “Of course, the extent of this is highly uncertain“.
Powell further said that inflation is still too high: “Many people are currently experiencing high inflation, for the first time in their lives.” “We think that failure to reduce inflation would not only prolong the pain but ultimately also increase social costs of a return to price stability, causing even greater damage to households and businesses, and we aim to avoid this by remaining steadfast in pursuing our goals,” he added.