The head of the Federal Reserve System (Fed), Jerome Powell, announced a rate hike of 75 basis points (bp) on Wednesday, June 15, stressing in an interview with CNBC that such a measure would not become logical.
Powell said a 50 or 75 basis point rate hike seems “most likely” at the next Fed meeting in the context of the current economic situation in the US.
“It is clear that a 75 basis point [rate] hike is unusually large and I do not expect such moves to become commonplace in the future. We will make decisions at each meeting and will inform about them as soon as we can, ”the head of the Fed said.
The next meeting of the Fed is scheduled for July this year. Powell also spoke about the situation with inflation in the country. According to him, the prerequisites for the risk of further inflation growth are still high.
“We are focused on achieving its reduction,” he said.
The Federal Reserve on June 15 raised the base rate to 1.5-1.75%. Experts also changed the forecast for US GDP growth in 2022 from 2.8% to 1.7%, the unemployment rate – up to 3.7% from the projected level of 3.5%. The forecast for inflation in the country this year has also been raised from 4.3% to 5.2%.
In May, the US Federal Reserve raised the base rate by 5.5 percentage points to 0.75–1% per annum. At the same time, Powell allowed it to increase by an additional 50 basis points (bp).
On June 10, annual inflation in the US accelerated to 8.6% in May. This figure is the highest since December 1981. Bloomberg suggested that this would push the Fed to raise interest rates and “exacerbate political problems for the White House and Democrats.”
A day earlier, on June 9, the head of the US Treasury Department, Janet Yellen, said that sanctions against Russia provoke an increase in food and fuel prices in the United States market. In her opinion, the decline in fuel prices in the country in the short term is unlikely.