WASHINGTON (dpa-AFX) – To combat the high inflation rate, the US Federal Reserve will consider raising the key interest rate by 0.5 percent at its next meeting in early May. Central Bank Chairman Jerome Powell said Thursday at an International Monetary Fund (IMF) event in Washington. With inflation and the 0.25 percentage point hike in interest rates in March, it was “appropriate to move a little faster,” Powell said. Powell said a 50 basis point rate hike would be up for discussion at the May 4 Fed Council meeting.
The aim is to use the central bank’s tools in such a way that supply and demand adjust again and inflation goes down. The economy should cool down in a way that does not correspond to a “recession,” Powell said. “That’s our goal,” he said. The balancing act will not be easy. “It’s going to be a big challenge. We’re going to do our very best to make it happen,” Powell promised. “And restoring price stability is absolutely critical,” Powell said. This is a prerequisite for a strong labor market and stability in the financial markets, he said.
The key interest rate for the world’s largest economy has been in the range of 0.25 to 0.5 percent since March. On the markets, increases of more than two percentage points are expected for this year alone. The pressure on the Fed is great because the inflation rate is at its highest level in decades, which is reducing the purchasing power of consumers. In March, consumer prices rose by 8.5 percent compared to the same month last year. The Fed is aiming for an inflation rate of two percent in the medium term./jbz/DP/he