Fed Chairman Jerome Powell said there will be no rate cuts this year.

(European News Agency)

[Financial Channel/Comprehensive Report] The US Federal Reserve announced on Wednesday (22nd) that it will raise the benchmark interest rate by 1 yard to 4.75% to 5%, reaching the highest level since September 2007.

Federal Reserve Chairman Jerome Powell said at a press conference that inflation is still high and the market is wrong to predict that interest rates will be cut this year. This year's rate cuts are not the Fed's basic expectation.

The Federal Open Market Committee (FOMC) statement after the meeting suggested that the cycle of rate hikes is coming to an end, and most officials expect the Fed to raise interest rates only once for the rest of the year.

Powell warned that there is still a long way to go to combat inflation, which has moderated since the middle of last year, but recent economic data has been strong, indicating that inflationary pressures remain high.

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Powell revealed that in view of the crisis in the banking industry, the Fed did consider pausing interest rate hikes a few days before the interest rate meeting, but still reached a strong consensus on raising interest rates.

"We're committed to restoring price stability, and all the evidence is that the community is confident that we're going to do that, that inflation will come down to 2% over time, and it's important that we do that with our actions and our words," he said. Maintain that confidence."

Powell also pointed out that the banking system is sound and resilient. Although he expects this may tighten credit conditions for households and businesses, which will affect economic outcomes, it is too early to judge how monetary policy should respond. morning.

Powell emphasized that the Fed will pay close attention to the upcoming economic data, and also assess the actual and expected impact of tightening credit conditions on economic activity, the labor market and inflation, so as to provide information for policy decisions.

Powell also said that there is still a chance of a soft landing for the economy.

He pointed out that it is too early to say whether the banking crisis has had any impact on the soft landing, but the longer the banking crisis lasts, credit standards and credit availability will be affected. The path to landing still exists."

The latest interest rate dot plot suggests rates will continue to move higher in 2023, but only modestly, with 10 of the 18 FOMC voting members forecasting a terminal rate of 5.1%, unchanged from the Fed's December forecast , meaning most officials expect the Fed to raise rates just one more time for the rest of the year.

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