Do not expect rate hikes anytime soon.
Federal Reserve Chair Jerome Powell, speaking at Q&A session presented by Princeton University, revealed that interest rates will remain low for the foreseeable future.
“That wouldn’t be a reason to raise interest rates, unless we start to see inflation or other imbalances that would threaten the achievement of our mandate,” he said.
““If inflation were to move up in ways that are unwelcome, we have the tools for that, and we will use them. No one should doubt that.”
He added: “We were in a good place in February of 2020, and we think we can get back there, I would say, much sooner than we had feared.”
Even if inflation started to skyrocket, which it is showing signs of doing, the central bank might not necessarily act. The Fed has a new approach to inflation in which it allows inflation to trend higher and average out before the institution raises rates.
That said, a growing list of Fed officials are sounding the alarm about rising inflation that might be higher than what the U.S. has been accustomed to and that Americans should just “get used to” a greater cost of living.
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