Fed Chair Powell Anticipates Interest Rates to Be Higher than Previously Predicted

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On Tuesday, Jerome Powell, the Chairman of the Federal Reserve, warned that interest rates are expected to rise more than what the central bank policymakers had originally predicted.

Referring to data from earlier this year that revealed inflation had halted its deceleration in late 2022, the central bank leader cautioned of an impending tighter monetary policy to curb the growth of the economy, CNBC reported.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said, as reported by CNBC. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Officials had estimated the terminal rate to be 5.1% in December. However, current market pricing surged following Powell’s comments, with CME Group data indicating a range of 5.5%-5.75%. Powell did not disclose his forecast for the eventual peak of the rates.

Written by staff