The Federal Reserve raised its benchmark interest rate Wednesday by three-quarters of a point for a fourth straight time but hinted that it could soon reduce the size of its rate hikes.
Powell suggested that the Fed may decide in coming months to slow its aggressive interest rate increases. Yet he also made clear that the Fed isn’t even close to declaring victory in its fight to curb an inflation rate that is nearWhen the Fed ended its latest policy meeting Wednesday, it announced that it was pumping up its benchmark rate by a substantial three-quarters of a point for a fourth straight time. Its key rate now stands in a range of 3.75% to 4%, the highest in 15 years.
Yet as his news conference got under way, Powell struck a harder line. He stressed that the Fed’s policymakers have seenand would likely have to send rates even higher than they thought they would at their last meeting in September. The Fed chair pointedly emphasized that it would be “very premature” to even think about halting the rate hikes. Inflation pressures, he said, remain far too high.Stocks sharply reversed their gains and tumbled into the close of trading. The Dow Jones Industrial Average ended the day down over 500 points, or about 1.5%.“I think he accomplished his goal” of striking hawkish and dovish notes, said Vince Reinhart, chief economist at Dreyfus and Mellon. “That’s why the market was so confused.
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