Powell Says Economy Slowed Significantly From Last Year’s Pace

Jerome Powell Speech: U.S. Federal Reserve chair Jerome Powell revealed economic projections on interest rates, unemployment, inflation and economic growth in his speech after the release of interest rate hike decision. The Fed chair said the labor market remains extremely tight with median projection for the unemployment rate rises to 4.6% by the end of next year. Also, the activity in the housing sector has weakened significantly.

He said the US economy slowed significantly from last year’s pace. A restrictive policy stance will likely be needed for some time, he added. Overall, Powell said a sufficiently restrictive policy stance is yet to arrive.

More Evidence Needed To Show Inflation Drop Is Sustained

Powell said the last two CPI reports showed a welcome reduction in the monthly pace of price increases. “It will take substantially more evidence to have confidence that inflation is on a sustained downward path.” Maintaining the previous stance of not loosening policy prematurely, Powell said the status quo on inflation will continue. Speaking about how the economy could places an year from now, the Fed chair said no one knows with any certainty where the economy will be.

“The historic record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”

Earlier, the Federal Open Market Committee (FOMC) announced a 0.50% interest rate rise. Stock markets and crypto prices reacted negatively despite the hike being on the expected lines. Meanwhile, Bitcoin (BTC) price stands at $17,946, up 1.27% in the last 24 hours, according to price tracking platform CoinMarketCap. The Fed hike announcement essentially nullified the gains BTC made earlier. At one point on Wednesday, the top cryptocurrency was trading at $18,300 range.

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Explaining the decision, the committee said the repeat of ongoing rate increases are likely appropriate to return inflation to 2 percent, going forward. The FOMC said it is looking at achieving maximum employment and inflation at the rate of 2 percent over the longer run.

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