Senior members of the Federal Reserve System, the central bank of the U.S., said that the Fed will raise base rates to over four percent until early next year and maintain them for a while. As the Fed’s Chairman Jerome Powell and senior members delivered a firm message to continue its tightening monetary policy by “raising interest rates despite some pain,” the U.S. stock market plunged by close to four percent over the concerns about global economic recession.
“I think we're going to have to move short-term interest rates up ... above 4% and probably need to hold them there next year,” President and CEO of the Federal Reserve Bank of Cleveland Loretta Mester said at the Fed’s annual symposium held in Jackson Hole, Wyoming on Saturday. For the U.S. base rates to reach four percent by early next year, an additional increase of at least 1.5 percentage points is needed from the current level of 2.25 to 2.5 percent.
“The Bank of Korea should keep raising base rates until inflation is under control,” Bank of Korea Governor Rhee Chang-yong said during an interview with Reuters on Saturday after participating in the Jackson Hole meeting. “While the Bank of Korea began to raise interest rates before the Fed, it will be hard to stop it before the Fed.”