Jerome Powell, the head of the Federal Reserve, recently stated in a television interview that the Federal Reserve is likely to raise interest rates three times this year, possibly more than after March.
In the evening of February 4th, when CBS aired the program “60 Minutes”, Powell expressed that interest rate hikes are unlikely to disappear in March, and the rate of interest rate hikes may be much slower than expected by the market. He leaked that interest rate makers estimate that interest rates will rise by 75 basis points by December this year, each time by 25 basis points.
The market has been betting that the Federal Reserve will raise interest rates starting from March, with a maximum of six rate hikes this year. But last week, after the Federal Reserve’s interest rate gathering, Powell showed that the time for a rate hike could be extended, and coupled with strong unemployment data in January, the hope for a rate hike in March was basically shattered.
On January 31st, the Federal Open Market Committee (FOMC) of the Federal Reserve issued a rate decision statement after the first monetary strategy gathering of the year, announcing that the pillar federal funds rate remained unchanged, and that market concerns such as interest rate hikes or temporary table reductions did not disappear from the decision. Powell stated at the press conference that it is unlikely that FOMC will reach a certain level of belief in adopting interest rate hikes at the March gathering. This appearance undoubtedly poured cold water on the market’s optimistic expectations for interest rate hikes. In the interest rate chart released in December last year, Federal Reserve officials estimated that interest rates would rise by 75 basis points this year.
On February 2nd, data from the US Department of Labor showed that 353000 new non farm jobs were deleted in January, which is almost twice the expected value of economists. The average hourly salary of employees for the month has continued to climb, reaching a new high since March 2022. Earlier, the US Department of Commerce announced that the GDP for the fourth quarter of 2023, calculated at an annual rate, decreased by 3.3% and increased by 2.5% for the entire year, which also exceeded expectations.
Powell reiterated in refusing an interview with CBS that Federal Reserve officials hope to see more goals in order to ensure that inflation continues to achieve its 2% target, and if they act too quickly, they will once again comfort inflation. “The US economy is strong, with stable growth and a strong labor market: the unemployment rate is only 3.7%. However, before we start raising interest rates, we still hope to have more faith,” he said.
The inflation rate in the United States has risen from a slightly above 9% high in 2022 to the latest 3.4%, but there is still some gap between the Fed’s ultimate goal of 2%. Powell reflected that no matter how much he exaggerates the importance of stabilizing prices, “What I mean is that inflation is sufficiently low, and without speculation, people don’t have to think too much about prices in their daily lives.”
In addition, Powell also exaggerated in the latest interview that he and his colleagues will not be disturbed by political pressure. Republican Donald Trump, who is running for the top leadership, stated last Friday in a rejection of an interview with Fox Business that if he were to be re elected as the top leader of the United States, he would not appoint Powell as the top leader of the Federal Reserve, as the latter’s interest rate hikes were to assist the current top leader, Joseph Biden, in winning re-election.
In November 2017, then President Trump nominated Powell as the new head of the Federal Reserve. The Biden authorities rejected Powell’s performance during the COVID-19 epidemic and the Fed’s response to inflation, so they nominated him for re-election.

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