JACKSON HOLE, Wyoming (Reuters) – The U.S. Federal Reserve (Fed) may have to raise interest rates further to ensure inflation is contained, Fed Chairman Jerome Powell told the annual symposium on Friday. of Jackson Hole, Wyoming.
Fed monetary policymakers will proceed “with caution when deciding on further tightening,” he added.
“It’s incumbent on the Fed to get inflation back to our 2% target, and that’s what we’ll do,” Jerome Powell said.
“Although inflation has come down from its peak – a welcome development – it remains too high. We are ready to raise rates further if necessary, and we intend to keep our policy restrictive until that we are confident that inflation is sustainably approaching our target,” he continued.
Equity markets firmed moderately after the speech, which came as no surprise to investors.
“It was largely about non-information: the Fed recognizes that progress has been made and (…) reiterates that it will go, at best, very slowly and cautiously”, summarizes Michael Green, chief strategist at Simplify Asset Management.
“This is slightly less restrictive talk than markets feared: Jerome Powell echoed much of his ‘higher for longer’ statements used last year, but he also said the Fed will proceed with caution (…), a message that clearly makes the central bank dependent on short-term data,” said Karl Schamotta, chief strategist at Corpay.
Yields on the monetary policy-sensitive US two-year rose 6.1 basis points to 5.0801% at 1448 GMT, while the 10-year security rose 4.2 basis points to 4.2769%. The yield gap between the two maturities, a harbinger of recession according to investors, has increased.
The dollar rose 0.24% against a basket of diversified currencies, supported by the speech of Jerome Powell -ce, as markets continue to anticipate another pause in September.
The July 25-26 Fed Monetary Policy Committee (FOMC) meeting concluded with a unanimous 25 basis point hike in interest rates after a pause in June in the campaign monetary tightening.
(Howard Schneider report, French version Corentin Chapron and Kate Entringer, edited by Jean-Stéphane Brosse)
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