Powell confirms it: Rate hikes will be lower in December. market jumps
“The time to ease the pace of rate increases may come as soon as the December meeting. It makes sense to moderate the pace of our rate hikes as we get closer to the level of moderation that will be enough to reduce inflation,” the official said.
The market jumped after the statements, reflecting gains for the first time in four days, with the Nasdaq rising 262 points or 2.39%, the Dow Jones up 235 points or 0.70%, and the S&P 500 gaining 56 points or 1.43%.
Regarding the terminal rate, or the peak of increases, the president of the Fed indicated that in effect it would be above the projections of the organization in September, now that maximum should be between 5% and 5.25%, indicated Powell.
This would imply a possible adjustment of 50 bp in December, and possibly another three of 0.25% next year.
“Given our progress in tightening the policy, the timing of that easing is far less significant than how long it will take to keep the policy at a restrictive level,” Powell said.