United States: The Federal Reserve is on track for two more increases, according to Powell

However, he felt that these further increases should take place at a slower pace than before. (Photo: Getty Images)

WASHINGTON – US Central Bank President Jerome Powell on Thursday raised the possibility of raising interest rates two more times by the end of the year, while a conservative mentioned the need for “additional increases” after a hiatus.

“A strong majority (of Fed officials) think it would be appropriate again, assuming the economy behaves as expected (to raise interest rates) twice before the end of this year,” Jerome Powell told a Senate committee. He had already been questioned on Wednesday by elected members of the House of Representatives.

“We are determined to control inflation and a large majority of the Monetary Committee thinks we are close, but we still need to raise interest rates a bit,” he said.

However, like the day before, he felt that these further increases should be made at a slower pace than before.

For her part, the institution’s governor, Michelle Bowman, ruled that “additional rate hikes will be necessary to bring inflation back to our target” of 2%.

At a conference organized by the Cleveland Regional Branch of the Federal Reserve, she said she “endorsed” the Fed’s decision on June 14 to leave interest rates in their range of 5.00-5.25%, off for the first time since March 2022, after 10 consecutive increases. .

The governor noted that “although monetary policy tightening has had some impact on economic activity and inflation so far, we have seen core inflation (excluding food and energy) stagnant since the fall of 2022.”

banking regulations

She added, “I expect that we will need to raise the rate further in order to achieve a sufficiently tight stance on monetary policy to reduce inflation significantly and sustainably.”

However, Michelle Bowman did not specify to what extent she considers it necessary to raise the key interest rate.

The next meeting of the Federal Reserve will be from July 25-26.

Jerome Powell also noted the evolution of banking regulations accelerating after the crisis that has rocked the sector since the fall of Silicon Valley Bank in early March.

In particular, the capital requirements of banks, that is, the liquidity that the bank must have at all times to face risks and unexpected events that may increase.

The Fed chair stressed that “none of this should affect” smaller banks.

The American banking landscape, in addition to large institutions, consists of a large number of small local or regional banks, local banks.

“Basel III”, a broad set of reforms for the international banking sector, was initiated after the 2008-2009 financial crisis in order to enhance the safety of banks. Many steps have been taken, but some reforms still need to be finalized, especially in the United States.

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