Powell Signals Fed Tightening Done With Rate Hold

Federal Reserve Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades after it held off on raising interest rates for a second consecutive policy meeting.

“The question we’re asking is: Should we hike more?” Powell told reporters during a press briefing after the decision. “Slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more.”

The central bank’s policy-setting Federal Open Market Committee left its benchmark rate unchanged Wednesday in a range of 5.25% to 5.5%, following a two-day meeting in Washington.

Officials signaled in a post-meeting statement that a recent rise in longer-term Treasury yields reduces the impetus to hike again, though they left open the door to another increase.

Powell’s dovish pivot cheered markets, with the S&P 500 index closing more than 1% higher on the day.

The 10-year US Treasury yield tumbled below 4.75% for the first time in two weeks, extending moves initially triggered in the morning by the Treasury Department’s plans to slow the pace of increase in its long-term debt sales.

The Fed chief told reporters that decisions will be made “meeting by meeting,” and noted the committee will have an abundance of data, including two employment reports and two inflation reports — as well as more data on financial conditions and geopolitical risks — before December.

He said Fed leaders are monitoring the Israel-Hamas war for economic implications.

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