Fed could ease rate hike in December but keep rates high: Powell

The United States Federal Reserve (Fed) could moderate interest rate rises from its next meeting in mid-December, its president said on Wednesday, Jerome Powell.

“The moment to moderate the increases of rates could arrive in December”, declared Powell, who specified, however, that it is “probable” that interest rates will remain high “for a certain time” to contain inflation in a lasting way.

The message of Powellhighly anticipated by the markets, implies that the rate hikes of three-quarters of a percentage point that had been occurring in the last monetary policy meetings of the organization and that had not been used since 1994, could end.

In Wall Street, indices rose sharply after Powell’s remarks. The Dow Jones won 2.18%, the technological Nasdaq 4.41% and the S&P 500 3.09% at the closing bell.

The Fed plans to meet on December 13 and 14.

Powell warned, however, that the task of fight inflation It is far from over: “Inflation is still too high,” he emphasized. According to the leader, the PCE inflation index, the one preferred by the Fed, which will be released on Thursday, is expected at a level of 6% over 12 months, slightly below the 6.2% over 12 months in September.

The other inflation index, the CPI or consumer price index, fell to 7.7% over 12 months in October from 8.2% in September.

“Months with low (inflation) data are often followed by rebounds,” Powell also added.

“Considerable uncertainty”

The Monetary Policy Committee The Fed’s (FOMC) also predicts that further hikes “will be appropriate,” Powell said.

The head of the Fed did not specify, however, to what level these rates should rise, which are currently located in a range of 3.75 to 4.00%, after remaining close to zero until the beginning of the year.

There is “considerable uncertainty” as to what level of rates will be “sufficient”, he remarked.

The Fed it increased the cost of money as a way to cool the economy, discouraging consumption and investment to fight strong inflation in the United States.

Indeed, the economic activity in USA stagnated or increased very slightly in November in the United States, and the rise in prices also moderated slightly, according to the Fed Beige Book posted on wednesday.

“Economic activity remained practically stable or slightly rising since the previous report,” indicated this report that covers 12 regions of the system of the Federal Reserve.

Employment rose slightly in most but two US regions, but “demand for labor has weakened globally,” according to the report. This parameter is one that the Fed wanted to see yield in order to reduce the pressure on prices.

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