Federal Reserve Chairman Jerome Powell has said that any talk of cutting interest rates is premature and that further hikes could be on the horizon.
His comments came in a speech to the Economic Club of Washington, where he discussed the outlook for interest rate policy. While noting that the labor market is strong and the economy growing, he warned that inflation remains subdued.
The U.S. central bank currently has its benchmark interest rate set at a range of 2.25 percent to 2.50 percent after increasing it four times in 2018.
Powell said that he believes it is too early to tell what the future holds for interest rates, even though some analysts have suggested the Fed could cut rates to boost the economy. He said that the Fed is monitoring economic conditions and will make adjustments, if needed, but that it is premature to start talking about cuts before the Fed has seen how the economy evolves.
Powell also warned that there is plenty of room for further rate hikes, depending on how the economy performs. He noted that U.S. interest rates remain low by historical standards, and that if the economy remains robust, the Fed may consider further rate hikes.
The remarks demonstrate the Fed’s cautious stance on interest rate adjustments and indicates that while rate cuts are still a potential option, further hikes are also possible. It is uncertain which direction the Fed may take in the future, and it will depend heavily on the data the Fed receives in the coming months.
