Federal Reserve Board Chairman Jerome Powell spoke today during a press conference following a meeting of the Federal Open Market Committee at the Federal Reserve Board Building in Washington, DC. Mandel Ngan/AFP/Getty Images
Federal Reserve Chair Jerome Powell said the Fed was more concerned about the appropriate rate target to fight inflation than how quickly it continued to hike rates.
Though Powell opened the door to slowing the Fed’s rate hike pace and raising rates by perhaps a half point in December instead of another three-quarters point, he noted that the Fed still has a long way to go before rates are high enough are to bring inflation down to a comfortable level.
“We believe there is still work to be done before we pass this test,” Powell said. “That’s why we say continued rate hikes will be appropriate. … We could go to higher levels than we thought.”
Powell reiterated that the Fed is acknowledging the fact that it is flying blind to a certain extent: the economic effects of monetary policy take a while to sink in.
“That’s why I said it’s appropriate to slow the pace of increases,” Powell said. “So that time is coming. And it can come at the next meeting or the one after that. No decision has been made yet.”
But Powell made it clear that “the question of when to moderate the pace of interest rate hikes is now much less important than the question of how much to raise rates and how long to keep monetary tightening.” In other words, even if the Fed slows rate hikes, it will continue to raise rates for quite some time.