Powell Dismisses the Need for Additional Rate Hikes

In today's developments, the Federal Reserve wrapped up its two-day Open Markets Committee meeting by maintaining interest rates, as widely anticipated. Furthermore, the Fed signaled a likelihood of keeping rates unchanged for an extended period, surpassing prior expectations. Federal Reserve Chair Jerome Powell downplayed the likelihood of rate cuts in the near future, while also suggesting that rate hikes are not imminent. "I think it's unlikely that the next policy rate move will be a hike," Powell stated during Wednesday's post-FOMC-statement press conference. This statement diverges from the perspective of Fed Governor Michelle Bowman, a voting member of the Fed's policy committee, who recently floated the idea of raising the fed funds rate again. Bowman cited persistent inflationary pressures that remained stubbornly high in the first quarter as a potential reason for such action. Federal Reserve chair Jerome Powell waved away concerns that the U.S. economy is in a state of stagnation while having too high inflation, a doomsday economic scenario known by the portmanteau “stagflation.” When asked about such a possibility by a reporter, Powell pointed out that inflation is far lower than in the infamous episode of stagflation in the 1970s, while unemployment is near historic lows.