Another “unusually large” increase in interest rates may be appropriate at the Federal Reserve’s September meeting, but the decision will be determined by the incoming economic data between now and then, Fed Chair Jerome Powell said on Wednesday.
The Fed’s decision about whether to deliver a third straight 75 basis point increase – or something different – will be guided by whether they see firm evidence of inflation beginning to abate, Powell said at a press conference following the central bank’s latest two-day policy meeting.
The lack of clear visibility into the future trajectory of the economy means the Federal Reserve can provide reliable guidance about where its policy is headed only on a “meeting by meeting” basis, Powell said.
He said said there is “significantly” more uncertainty now than is normally the case, meaning officials cannot provide the longer-term guidance on the level and trajectory of interest rates that they had in the past.
“I don’t think the economy is in recession right now,” Powell said at a press conference following the central bank’s latest two-day policy meeting. But officials do believe the economy needs a period of below-potential growth to create sufficient slack to lower inflation.
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