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BY VASANTHA
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As the Fed eases, interest rates rise. Yet the economy is far from accelerating. Inflation has slowed since the Fed raised its key short-term interest rate by a quarter percentage point in December, as expected.
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After a two-day meeting, the Fed said inflation has eased somewhat but remains elevated. Even as it begins to weigh the benefits of the initiative against growing recession risks, the central bank seems reluctant to signal an end to its aggressive campaign to stop price increases.
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Powell hinted that a few more rate hikes could halt its campaign. Continuing (rate) increases are appropriate to bring inflation down to the Fed's 2% goal, the Fed said in its statement. The Fed was expected to say "additional increases" were needed, indicating the hiking cycle is nearing an end.
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It remains too high, Powell said at a news conference. He said, "We still have work to do there.". No decision has been made on when rates will peak.
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In its boldest flurry of rate increases since the early 1980s, the Fed has raised the federal funds rate to 4.5% to 4.75%. It will depend on how rapidly inflation falls whether the Fed stops short of the level forecast in December. Inflation should be controlled by hiking too much, he said.
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In his view, managing the risk of doing too little remains difficult. Powell said later that if inflation continues on course, the Fed could raise rates to the 5% to 5.25% range and then pause. March and May would be required.
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