Fed's ability to influence economy depends on influencing US public view: Chair

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve's ability to influence the economy depends to some extent on influencing American public's view of current and future economic conditions, according to Chair Jerome Powell.

"When my colleagues and I publish our projections for the most likely path for the economy and interest rates, as we did a couple of weeks ago, one of our goals is to influence spending and investment decisions today and in the months ahead," he told Thursday at a teacher Town Hall meeting held in Washington, D.C.

"That will only be the case if people understand what we are saying and what it means for their own finances," he added.

The Fed's aggressive monetary tightening to tame high inflation since March last year has increased credit costs for Americans, while the central bank signaled last week that it is not ready to put on brakes on rate hikes yet.

The bank's hikes have been increasing borrowing costs in order to lower amount of spending by Americans, in order to fight inflation that soared last summer to its highest level in more than 40 years.

Although the Fed on Sept. 20 skipped an interest rate hike for the second time this year, it expects an additional rate hike in one of its two remaining meetings before the year's end, while it indicated fewer rate cuts for next year, according to its projection materials.