The chairman of the Federal Reserve (Fed), the Central Bank of the United States, Jerome Powell, said this Tuesday, 7, that the increase in interest rates, necessary to contain the rise in inflation, should be greater than previously forecast.
In December, the US institution had defined an interest rate ceiling of 5.1% for 2023. However, “the final level of interest rates will probably be higher,” said Powell. The statement was given in the semiannual address to the Senate Banking Committee.
A United States Bureau of Labor Statisticss disclosed that annual inflation in the United States slowed from 6.5% in December 2022 to 6.4% in January 2023. The drop came after a peak of 9.1% in June of the previous year, the highest level annually for nearly 40 years.
However, the deceleration in consumption was smaller than expected, which contributed to the increase in the basic interest rate in the country. The Fed’s goal is to bring US inflation down to 2%.
Powell also stated that the “restrictive monetary policy stance” is necessary, even if it directly affects families, communities and companies across the country. Monetary tightening began in March 2022 to control the effects of the pandemic. In the period, the US monetary authority raised the rate range from 0% to 0.25% to 4.50% to 4.75%.