Fed Chair Powell: More Rate Hikes on the Horizon?

The Federal Reserve’s chairman Jerome Powell shocked investors Tuesday by suggesting that further rate hikes could potentially be seen if the economic environment conditions increase. The rate hikes could potentially counterbalance the effects of this desired growth. Powell has recently referred to the current talk of rate cuts as “premature,” breaking from the earlier thought that the Federal Reserve might be considering a future of rate cuts in the coming months and years. Powell has stated that if certain conditions apply, rate hikes may be necessary, setting the Federal Reserve aside from other global central banks that are discussing the potential for cutting interest rates to encourage further economic growth in their respective countries. Powell’s comments have come as a surprise to many who expected the Federal Reserve to continue its interest rate cutting policy, which has been in place for the past decade. However if the economic conditions require it, this latest statement could be a clear sign that the central bank is preparing to move in the opposite direction. The recent talk of rate cuts was thought to have been triggered by increasing concerns over a potential global economic slowdown, especially in the wake of the United States’ looming trade wars with multiple countries. Powell’s comments have stoked new fears in the minds of investors, although he backtracked from his earlier statement by suggesting that the Fed was not considering implementing any policy anytime soon. Investors now wait with baited breath to see what the Federal Reserve might do in the coming months, but one thing’s for certain, additional rate hikes cannot be ruled out if the economic environment demands.