The Fed’s Jerome Powell, promising to take into account both the possibility of an overheating economy and the necessity to sustain expansion, today told U.S. legislators that they would continue with gradual interest rate hikes, even considering the upped stimulus through tax reduction and government expenditures.
Fed officials forecast rates to rise three times in the year, and the chairman did not say that increases should go faster even given the favouring circumstances as government stimulus and a more robust global economy that push the U.S. growth.
Initial signal by Powell at the helm of the Fed is that the major tax revamp and government expenditures plan initiated by Trump and his administration will not cause a quicker interest rate hikes at least for the time being.
Since the time of Powell’s precursor Janet Yellen the Fed started gradual interest rate increases and “gradual” is the mode they’ve been sticking to since the end of 2015. The first rate hike is to be approved at the Fed’s nearest gathering in March, where updated economic forecasts will be announced and the first press conference with Powell will take place.