SINGAPORE — In delivering its fourth straight steep interest rate hike on Thursday to quell inflation, the United States Federal Reserve signaled that it could slow down the pace of future rate hikes.
Economists told TODAY on Thursday that households here would have to deal with even higher mortgage payments or car loans in the future and businesses having to pay higher borrowing costs, even as the pace of increases slow. “We still have some ways to go. Incoming data from our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.
Mr Song said that this suggests that the Fed is worried about how the cumulative effect of the steep interest rate hikes over a short period of time will hurt the economy. The earlier statement that referred to cumulative and lag effects of policy tightening had sent the finanicial market into an initial state of euphoria, she said. But that quickly unwound when Mr Powell warned that the terminal rate would have to be higher than initially expected.Although Singapore's central bank doesn't set interest rates and uses the exchange rate as its only form of monetary policy, borrowing rates here are heavily influenced by global trends, especially from the US.