Powell says the Fed could hike rates by 0.75 percentage point again

Federal Reserve Chair Jerome Powell said Wednesday the central bank could raise interest rates by a similar magnitude at the next policy meeting in July.

“From the perspective of today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting,” Powell said a press conference following the central bank’s policy decision. “We anticipate that ongoing rate increases will be appropriate.”

“The pace of those changes will continue to depend on incoming data and evolving outlook on the economy,” Powell said. “Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common.”

The central bank on Wednesday raised benchmark interest rates by three-quarters of a percentage point to a range of 1.5%-1.75%, the most aggressive hike since 1994.

Powell leaving the door open to another big hike came as a positive surprise to market as investors wanted to see the Fed chief to show his seriousness to combat surging prices. Major equity averages jumped to their session highs after Powell’s remarks.

According to the “dot plot” of individual members’ expectations, the Fed’s benchmark rate will end the year at 3.4%, an upward revision of 1.5 percentage points from the March estimate. The committee then sees the rate rising to 3.8% in 2023, a full percentage point ramp higher.

The Fed’s move comes with inflation running at its fastest pace in more than 40 years. The Committee said in a statement that it is “strongly committed” to returning inflation to its 2% objective.

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