US Fed chair says central bank 'unlikely' to make rate hike

US Fed chair says central bank 'unlikely' to make rate hike

'We are prepared to maintain current target federal funds rate for as long as appropriate,' says Jerome Powell

By Ovunc Kutlu

ISTANBUL (AA) - The Federal Reserve Chair Jerome Powell said Wednesday the central bank is "unlikely" to make an interest rate increase despite inflation still hovering above its 2% target.

"It's unlikely that the next policy rate move will be a hike," he told in a post-meeting press conference after the Fed kept its federal funds rate unchanged in the 5.25%-5.5% target range, as widely expected, which is the highest level in 23 years.

"We need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time," Powell said. "That’s not what we think we’re seeing."

Consumer inflation annually rose 3.5% in March, above market expectations, still above the Fed's target of 2%.

Powell stressed that the members of the Federal Open Market Committee (FOMC) want to see "greater confidence" that inflation is falling toward the 2% target.

"So far this year, the (macroeconomic) data have not given us that greater confidence,” he said. "It is likely that gaining such greater confidence will take longer than previously expected."

"We are prepared to maintain the current target federal funds rate for as long as appropriate," Powell added.

The probability of a Fed rate cut of 25 basis points at the Fed’s June meeting stood at just 9% as of Wednesday, according to the FedWatch Tool provided by the US-based Chicago Mercantile Exchange Group.

The probability of a cut of 25 basis points at the July meeting was 26% and 42% for the September meeting.

Most analysts believe that the Fed's first interest rate cut could be delayed to November, or even December this year.

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