April 13, 2023

Several US Fed Officials Initially Supporting Rate Hike Pause

Several US Fed Officials Were Initially Supporting a Pause in Rate Hikes

The US Federal Reserve's chief, Jerome Powell and several other officials were initially supportive of a pause in the pace of interest rate hikes, sources have revealed. This could pave the way for an upcoming rate cut due to signs of a weakening economy.

The officials were considering how best to navigate through risks posed by trade tensions and moderating global demand. The aforementioned news was reported by The Wall Street Journal on Tuesday.

The Federal Reserve raised rates four times last year as part of its gradual policy tightening campaign which is now moderating. Sources familiar with internal deliberations at the Fed reserves suggested that several policy makers recently started considering a pause in raising rates which has led to speculations that the central bank might start cutting interest rate sooner than later.

The report stated that there were two camps among the policy makers, one aiming for further increases in borrowing costs while other draws back from further hikes.

Moreover, there’s increasing evidence backing up the utility of using forward guidance as it allows central banks to set expectations about future policies without having to act on them immediately.

Federal Reserve governors Lael Brainard and James Bullard have publicly backed calls for pausing rate hikes but Powell is yet to make any comments on this issue along with other top officials.

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