Federal Reserve Chair Jerome Powell said on May 19 that the interest rates may not have to be increased as much as previously estimated to slow down the economy.
Powell said that “developments” in the banking sector are resulting in tighter credit conditions which will likely impact economic growth and inflation. However, he added that the extent to which credit tightening is affecting inflation is uncertain.
Powell made the comments during his talk at the Thomas Laubach Research Conference.
Inflation will ‘take some time’
In terms of guidance, Powell said that bringing inflation down will “take some time” but the Fed is changing its stance toward policy firming as the “risks of doing too much versus too little are becoming more balanced.”
He added that the Fed has yet to decide whether further firming is necessary and is now in a position where it can “afford to look at the data and the evolving outlook” to make “careful assessments.”
Powell said:
“We have c
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