It is necessary to balance supply and demand. We have an overheated housing market with a huge imbalance. This is how the head of the US central bank Jerome Powell commented on the next interest rate hike.
The markets were counting on the increase
The Federal Reserve raised its benchmark interest rate by 0.75 percentage point. The new rate for overnight operations in the United States will thus be in the range of 3 to 3.25 percent. Fed Governor Jerome Powell made the announcement after the Fed’s two-day monetary policy meeting. This is another unprecedentedly sharp rate hike, but one that the markets had more or less counted on.
“We need to get supply and demand in balance. The real estate market will probably have to undergo some correction to get into a balanced situation as well,” Fed chief Jerome Powell said after the two-day monetary policy meeting.
The US economy and the recession
In his view, it is very likely that the US economy will have to go through a recession in order to not only bring inflation down to the targeted 2 per cent, but also to bring loose inflation expectations back to their original level. Experts expect one more rate hike before the end of the year.
