“It is possible” that (terminal) rates remain below the 5% threshold. This is what Fed chairman Jerome Powell said at the conference following the announcement of the US rate hike by 25 basis points, to the new range between 4.5% and 4.75%.
Powell answered a question posed to him by CNBC’s Steve Liesman.
At the same time, the Fed helmsman warned that US fed funds rates are unlikely to be cut during 2023 unless inflation falls faster.
“Given our outlook, I don’t think we will cut rates this year if our outlook proves correct,” said the Fed chairman, who also responded that he was “not worried” that the market of Treasuries is pricing in a rate cut before a pause from the US central bank.
Having said that, “if we see inflation falling much faster (than expected), it is certain that there will be repercussions on our monetary policy”.