U.S. Federal Reserve Chair Jerome Powell made clear during a news conference with media that the central back intends to continue raising interest rates in 2023 to lower inflation that is currently at 7.1% in America.
“We still have some ways to go,” Powell said, referring to the ongoing efforts to bring inflation down to the central bank’s 2% target.
The comments came after the U.S. Federal Reserve raised its benchmark interest rate by 50 basis points to a target range of 4.25% to 4.50%.
Central bank officials now forecast that interest rates will need to rise to at least 5.1% in 2023, before being cut to 4.1% in 2024.
Powell said the size of the interest rate increase to be delivered at the Federal Reserve’s next meeting on February 1 will depend on economic data. He also emphasized that the central bank is not considering a pivot away from its current rate increase cycle anytime soon.
“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” he said during the news conference.
Treasury yields rose and stock prices fell sharply in the U.S. following Powell’s comments.
Investors had speculated that the U.S. central bank would soon pause its rate hikes followed by interest rate cuts in the second half of next year.
The latest 50 basis point rate increase follows four consecutive 75 basis point hikes that have boosted interest rates in the U.S. at the fastest pace since the early 1980s.
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