Fed Holds Rates Steady; Powell Says More Data Needed for Policy
US Federal Reserve keeps interest rates unchanged. Chair Jerome Powell says more information will help determine appropriate monetary policy stance, noting inflation remains too high but expectations are moving in right direction.
The United States Federal Reserve has held interest rates steady, as widely expected by markets.
Chair Jerome Powell said the committee believes more information will help determine the appropriate monetary policy stance. He declined to directly respond to whether committee members still generally support one more rate increase this year, saying only that more information might be available by the time of the December meeting.
Powell said he does not advocate using forward guidance except in emergencies, nor does he favour making pre-judgments before meetings, as many variables may emerge in the meantime.
Asked whether the midterm elections had influenced the rate decision, Powell said political factors played no role and that the meeting did not discuss politics or elections at all.
Powell stated that inflation remains too high and that the Fed must ensure price changes in some areas do not spread. He said inflation expectations are moving in the right direction, noting that while near-term expectations have risen, longer-term indicators show households and businesses are confident the Fed will achieve price stability. He emphasised that the Fed has no soft or implicit inflation target, and that the 2 per cent target is measured using the Personal Consumption Expenditures (PCE) price index.
He also said the Fed is beginning to see some changes in financial conditions, but declined or was unable to say whether financial conditions are tightening. He added that he is not surprised by volatility in financial markets.