Why higher Fed rates are not totally off the table
Fed officials still think their next move will be to cut rates, but they are not entirely ruling out the possibility that they might have to raise them
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INVESTORS do not expect the Federal Reserve to raise interest rates again, and officials have made it clear that they see further increases as unlikely. But one important takeaway from recent Fed commentary is that unlikely and inconceivable are not the same thing.
After the central bank held rates steady at 5.3 per cent last week, Fed chair Jerome Powell delivered a news conference where what he didn’t say mattered.
Asked whether officials might raise interest rates again, he said he thought they probably would not – but he also avoided fully ruling out the possibility. And when asked, twice, whether he thought rates were high enough to bring inflation fully under control, he twice tiptoed around the question.
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