Any decision by the Federal Reserve to maintain its benchmark interest rate at an upcoming meeting should not mean the US central bank has stopped tightening monetary policy, Fed Governor Philip Jefferson said Wednesday.
In comments leaning towards what some called a “hawkish pause” (aggressive against inflation), with rates stable but the door open for further hikes, Jefferson said that “skipping a rate hike at an upcoming meeting will allow the Committee (Federal Open Market ) view more data before making decisions on the extent of further monetary policy tightening.”
“The decision to maintain our benchmark interest rate at an upcoming meeting should not be interpreted as having peaked for this cycle,” Jefferson said in remarks prepared for a financial conference in Washington.
Jefferson did not highlight the June 13-14 meeting, but markets are in a swing as they try to determine whether the Fed will actually break its bull cycle, if only temporarily, or hike rates after a string of stronger-than-data rates . economic expectation.
The Fed’s main measure of inflation accelerated in April and remains more than double the central bank’s 2% target, and new labor market data on Wednesday showed a jump in open positions.
Jefferson acknowledged that inflation remains “very high” and that “progress on some measures has slowed recently.”
But he also said he expects the economy to remain sluggish for the rest of the year as households spend savings built up during the Covid-19 pandemic and credit becomes scarcer and more expensive.
Source: Terra
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