At a speech at the Brookings Institution yesterday, Federal Reserve Chairman Jerome Powell said that December’s interest rate increase will likely be only a half of a percentage point rather than the 0.75 point rate hike announced over each of the past four months—a little bit of “easing up.” However, he cautioned, it will still be necessary to maintain “restrictive” rates for the foreseeable future, because the “overheated” labor market still needs to cool further, before the Fed can be reasonably confident that inflation will drop further toward its 2% goal, the Wall Street Journal reported.
Powell further stated that the timing of this “moderation” is less significant “than the question of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.” It is likely, he said, “that restoring price stability will require holding policy at a restrictive level for some time.”
