The Fed may raise interest rates sharply in May

An event that has received great attention from the international financial world is the latest statement from the Chairman of the US Federal Reserve (Fed) Jerome Powell on the possibility of the agency accelerating the monetary tightening.

Federal Reserve Chairman Jerome Powell. (Photo: AP)

Attending a discussion on April 21 of the International Monetary Fund (IMF), Mr. Powell signaled that he could raise interest rates by 0.5 percentage points at the next policy meeting in May.

The head of the US Central Bank said that stabilizing prices and stopping inflation is the most important goal of the Fed in the current period, in the context that the inflation rate in the US last month hit a high level. four-decade record.

However, the Fed’s move to raise interest rates faster is expected to cause many fluctuations to the market in the near future.

Previously, the Fed was determined not to raise interest rates throughout 2021 even though inflation was above the agency’s 2% target.

In a policy framework adopted at the end of 2020, the FED said it would “release” inflation higher than normal to boost the job market.

A few months ago, Mr. Powell and a number of Fed officials still believed that the increase in inflation was temporary and would decrease when disease-related factors such as supply disruptions or oversupply gradually subside.

However, Mr. Powell said these forecasts were all disappointing and the Fed was forced to change “tact”.

The policy meeting of the Fed’s Open Market Committee is scheduled to take place on May 3 – 4.

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