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Powell Says Peak US Rate 'Somewhat Higher' Than Sept Forecast

FED
  • (MNI)Peak U.S. interest rates next year are likely to be "somewhat higher" than the FOMC projected in September and stay restrictive "for some time" as the Federal Reserve seeks to cool demand and restore balance in the overheated labor market, Fed Chair Jerome Powell said Wednesday.
  • The FOMC will likely slow the pace of its rate hikes at its meeting in two weeks, but that's less relevant than how long rates will need to stay at that level, he added.
  • "It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting," Powell said in remarks prepared for a Brookings Institution appearance.
    • But, "given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level."
  • The USD has been hit in the immediate aftermath of the Speech's release with a general boost for major equity indices.
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