Fed will ‘definitely’ pause hikes, but the cycle is not yet done, Standard Chartered CEO says

The U.S. Federal Reserve looks set to temporarily pause its aggressive monetary tightening agenda, but it has not yet finished the job, the CEO of Standard Chartered bank said Monday.

Bill Winters told CNBC that the central bank’s decision last week to raise interest rates by 25 basis points signaled its plans to hold steady at its next meeting in June.

However, he added that it would likely mark an opportunity for policymakers to take stock of the latest data, and the extent to which their efforts to cool inflation are succeeding, rather than marking an end to the cycle.

“I think the Fed will definitely pause from here. But I think they have to see whether those inflation numbers really come down,” Winters told CNBC’s Dan Murphy in an interview in Dubai Monday.

Of particular concern to central bankers — both in the U.S. and elsewhere — is still rising wages, which they fear could prompt a wage-price spiral, with higher wages pushing up prices and causing inflation to become embedded.

To avoid that, policymakers want to see that job and wage growth is cooling before ending the hiking cycle entirely, Winters said.

“The fact is, job growth is still pretty strong, wage growth is still pretty strong. And that’s not just in the U.S., that’s in Europe and the U.K. as well, as in many other parts of the world,” Winters said.

“So, if we can get the regular wage growth cycle back under control, then I think the Fed can stop here. But it’s not done yet,” he added.

When the Fed does eventually decide that it has inflation under control and stops hiking, that will have a slowing effect on the U.S. economy and possibly beyond, Winters noted.

However, he said that growth continues to look resilient in other parts of the world, specifically Asia,…