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Fed Chair Powell Rules Out Interest Rate Hike

U.S. Federal Reserve Chair Jerome Powell has said that the American central bank’s next move is unlikely to be a rate hike, providing some relief to jittery markets.

Powell made the comment, which briefly sent the Dow Jones Industrial Average up more than 500 points, after the Fed elected to hold its key interest rate steady at its current range of 5.25% to 5.50%.

“I think it’s unlikely that the next policy rate move will be a hike. I’d say it’s unlikely,” Powell said when speaking to media.

However, while Powell ruled out an interest rate increase, the central bank left the timing of any interest rate cuts open ended and stressed that inflation needs to fall further.

The Fed Chair also emphasized that the central bank remains committed to its 2% annualized inflation target and has no plans to deviate from it.

In answering journalists’ questions, Powell said the U.S. labour market is starting to normalize, citing data released showing job openings are now at a three-year low in America.

Lastly, Powell downplayed the risk of stagflation.

Concerns about stagflation have emerged after a gross domestic product (GDP) report showed slowing economic growth while the U.S. inflation rate has inched up to its current level of 3.50%.

“I don’t really understand where that’s coming from,” said Powell, referring to stagflation. “I don’t see the ‘stag’ or the ‘-flation’,” he quipped.