The US Federal Reserve could raise rates “more aggressively” in 2022 if deemed necessary, its chairman Jerome Powell said on Monday, after the central bank raised benchmark rates for the first time in two years last week.
“If we conclude that it is appropriate to act more aggressively by increasing guideline rates by more than 25 basis points in a meeting or several meetings (ndlr: monetary policy), we will do so,” said Jerome Powell during the annual conference of the National Association for Business Economics (NABE).
The Fed raised its guideline rates for the first time since 2018 on Wednesday to fight inflation, which hit a 40-year high in the United States.
Inflation marked 7.9% at 12 months in the United States last February, according to the CPI index of the Department of Commerce. The Fed prefers to be governed by the PCE index which accounts for 6.1% at 12 months in January.
The first rate increase was moderate, by a quarter of a percentage point, to bring them to a range of 0.25% to 0.50%.
Most members of the Fed’s monetary committee expect rates of 1.75% at the end of 2022.
If the agency determines that it should go beyond the level of rates considered “neutral”, 2-2.5%, “we will do it,” Powell stressed.
“We are determined to restore price stability while preserving a strong labor market,” Powell said.
Even with energy prices rising due to the conflict in Ukraine, “the economy is today very strong and well positioned to handle tighter monetary policy.”
