Federal chairman Jerome Powell signals a rate pause in the June meet, says that the fed can afford to watch data
The federal chairman Jerome Powell signalled that he is inclined to a rate pause in the June meet as they have come a long way in tightening the monetary policy. Powell said that having come this far, they can afford to take a pause and assess the economic outlook and data. The press conference conducted at Washington DC. gave hopes to investors that a rate pause is likely on the table. However, if new data on consumer spending is higher than expected, then the fed chairman might change his inclination.
The federal reserve had increased rates to a range of 5 to 5.25 percent by 25 basis points in the May meet. The rate hike of last month was the 10th consecutive hike since March 2022.
The Federal Chairman expressed his views on monetary policy and key economic issues on Friday. Powell remarked that since the liquidity tools are pushing for a tighter credit policy, the Fed might not need to use the monetary tools and as a result lead to a pause in rate hike. He also said that they have come a long way in tightening policies and they can afford to take a pause to assess the data to make careful assessments. The Federal Chair also said in the end that though they may have not made any decision about the policy right now, they are still keen to assess the data for economic outlook.
When asked about the supply shocks, Jerome Powell said that it is hard to predict the future and the chances of a positive supply shocks are quite low.
Federal chairman Jerome Powell assured that transparency about monetary policy is constantly expanded and is an integral part of the democracy.Â
Kathy Bostjancic, Senior Vice President and Chief Economist at Nationwide Mutual commented that the baseline view of Fed Chair is to pause in June to assess incoming data, however if the consumer price data before meeting is above expectations then he might change his view. As Powell said that the guidance he is offering is quite limited.
Fed Now a month away from June meet
The next Fed meet is scheduled to take place on June 13-14 which is almost a month away.
The central bank of the United States has increased the federal funds rate by 5 points since it started hiking rates last year. The rate hikes of one year are one of the most aggressive in decades in order to reach the 2% target inflation. The rate hike is yet to see a pause as the rates have been hiked for 10 consecutive times the fed have met. The Fed had increased the rates by 25 basis points to a range of 5 to 5.25 percent.Â
Conference a tribute to Thomas Laubach
The conference conducted on Friday at Thomas Laubach Research was dedicated to the memory of Thomas Laubach who died in September 2020 at the age of 55. Ben Bernanke, former chairman and nobel prize winner and Jerome Powell both spoke about the contributions of Thomas and reminisced about their memories with Thomas Laubach. Both also said how Thomas was a kind person alongside having many remarkable career achievements.
