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Smaller Rate Hikes Likely in December, Says Fed Chair Powell

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Economics

Smaller Rate Hikes Likely in December, Says Fed Chair Powell

The Fed is expected to reduce its interest rate increases to half of a percentage point in December, though tighter monetary policy will continue until inflation ebbs


December 1, 2022
Exterior of Federal Reserve building
Image: Stock.adobe.com

Federal Reserve Chairman Jerome Powell announced Wednesday that smaller interest rate increases are on the horizon, but until tangible progress is made in the fight to cool inflation, monetary policy will remain restrictive. A moderating pace of rate hikes is expected to begin as early as December, but where the Fed goes from there remains unclear.

Borrowers can expect rate hikes of half a percentage point starting this month, but the Fed will continue to tighten its monetary policy until inflation recedes and the labor market improves, CNBC reports.

“Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level,” Powell said.

“It is likely that restoring price stability will require holding policy at a restrictive level for some time. History cautions strongly against prematurely loosening policy,” he added. “We will stay the course until the job is done.”

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