US Powell: "March Rate Hike Appropriate... Supports 0.25% Point Increase"

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), the central bank of the United States, has forecast a rate hike in March and even mentioned a specific increase of "0.25 percentage points."

On the 2nd (local time), Powell appeared before the House Financial Services Committee hearing and stated, "I believe it is appropriate to raise the target range for the federal funds rate at this month's Federal Open Market Committee (FOMC) meeting." He added, "I would like to propose supporting a 0.25 percentage point rate increase." He further noted that depending on inflation indicators, a larger increase could also be considered. Currently, the U.S. benchmark interest rate stands at 0.00?0.25%.

The market has taken the March rate hike as a given since the beginning of the year. Powell had also hinted at the start of rate hikes as early as March during the January FOMC press conference. However, as Russia's invasion of Ukraine recently increased uncertainty in financial markets, there were speculations that the Fed might slow down its tightening pace.

Regarding this, Powell mentioned, "The short-term effects of Russia's invasion of Ukraine, the ongoing war, sanctions, and future developments on the U.S. economy remain highly uncertain." He emphasized his stance on policy operation by stating, "The economy could change in unexpected ways," and that he would closely monitor the data.

In the materials submitted prior to the hearing that day, Powell also stated, "With inflation well above 2% and a strong labor market, we expect it to be appropriate to raise the target range for the federal funds rate at this month's meeting." He mentioned, "The process of shifting policy at this point will involve both raising the federal funds rate target and reducing the size of the balance sheet." The Fed's balance sheet currently amounts to about $9 trillion.

Powell is scheduled to appear before the Senate Banking Committee hearing on the 3rd.

This content was produced with the assistance of AI translation services.