Fed's hawkish stance

19 DEC,2022 | MEDC


The US Federal Reserve (Fed) said that interest rates would go “higher for longer”, with its Chairman Jerome Powell making it clear in his post-policy press interaction that the US Central Bank was in no hurry to stop. He noted that the Fed would need more evidence to believe that the inflation rate would fall in a sustained manner. Continued rate tightening by the Fed, along with the ongoing reduction in its balance sheet size would further constrain financial options globally. Policymaking has now moved to a new stage wherein central banks increase rates at a slower pace, but are likely to keep them at elevated levels until inflation is convincingly contained. Whether the markets like it or not, this is the best way to ensure macroeconomic stabilization in an increasingly volatile environment.

*Picture credit - Google 

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