As the global markets are patiently waiting for US Federal Reserve’s first rate hike for more than a decade, Federal Reserve Governor Jerome Powell said he was prepared to raise rates this year. Powell stated that as long as the economy continues its current performance, the central bank would increase rates twice; once in September and once in December.
Talking at an event sponsored by the Wall Street Journal, Powell said economic growth will accelerate in the second half of the year, while the labour market will continue its improvement and price pressure in the economy will start to build. "My own forecast calls for liftoff in September and for an additional increase in December," Powell added.
Fed’s governor said there could be “50-50” chance that his forecast will be wrong, however stated that it is time for the Fed to get ahead of the curve in an economy which is likely to continue growing.
According to Powell, no matter when the rate hike comes, the pace of increases will be “gradual,” possibly a percentage point each year. Powell’s is among five Fed policymakers whose most recently released announcements foresee two interest rate hikes before the end of this year.
In Fed officials’ projections, the seven Fed governors and 10 regional bank presidents clustered around a year-end figure of 0.625 percent for the benchmark federal funds rate, making a September rate hike possible.
The Fed has been keeping its interest rates near zero since late 2008.