In minutes from their policy meeting three weeks ago released Wednesday, Fed officials said that half-point interest rate hikes, rather than traditional quarter-point increase, “could be appropriate” multiple times this year.
Federal Reserve Chair Jerome Powell said new forms of digital money such as cryptocurrencies and stablecoins present risks to the U.S. financial system and will need new rules to protect consumers.
Federal Reserve Chairman Jerome Powell said that if necessary, the central bank would be open to raising rates by a comparatively aggressive half-point at multiple Fed meetings. The Fed hasn’t raised its benchmark rate by a half-point since May 2000.
The Senate Banking Committee approved Jerome Powell’s nomination to a second four-year term as chair of the Federal Reserve Wednesday, just hours after the central bank began what will be a difficult effort to combat inflation.
The Federal Reserve’s quarter-point hike in its key rate, which it had pinned near zero since the pandemic recession struck two years ago, marks the start of its effort to curb the high inflation that has followed the recovery from the recession.
The Federal Reserve on Wednesday will launch one of the most difficult tasks a central bank can attempt: Raise borrowing costs enough to slow growth and tame high inflation, but not so much as to topple the economy into recession.
Investors have ramped up expectations for an aggressive Fed posture in the face of the highest inflation in four decades. But the economists say the outlook has become muted by uncertainty over Ukraine, sanctions and surging commodities prices.
Chairman Jerome Powell said Wednesday that he supports a traditional quarter-point increase in the Federal Reserve’s benchmark short-term interest rate when the Fed meets later this month, rather than a larger increase that some of its policymakers have proposed.
The debate over how quickly to raise interest rates is being closely watched by financial markets and also could have an impact on the broader economy.
Federal Reserve Governor Michelle Bowman said Monday that she was open to lifting interest rates by more than the traditional quarter-point at the central bank’s next meeting in March.
Fed officials are expected to raise their benchmark short-term rate several times this year beginning in March. But economists have increasingly suggested that the Fed has waited too long to unleash its inflation-fighting tools.
A worsening inflation picture has touched off a range of opinions from the Federal Reserve’s policymakers about just how fast they should raise interest rates.
With high inflation squeezing consumers and businesses and unemployment falling steadily, the Fed also said it would phase out its monthly bond purchases, which have been intended to lower longer-term rates, in March.
The Federal Reserve said its 12 regional banks found that the economy was continuing to grow, but many regions reported a sudden pullback in spending on leisure travel, hotels and restaurants because of the rapid spread of the omicron variant of the coronavirus.
Fed officials now expect to raise short-term interest rates three times this year, a sharp shift from September, when they were divided over doing it even once. Economists increasingly expect them to raise rates at least four times in 2022.
On Wednesday, the government is expected to report that consumer prices jumped 7.1% over the past 12 months, which would be the steepest such increase in decades.
The Fed’s policy change does carry risks. Raising borrowing costs too fast could stifle consumer and business spending. That, in turn, would weaken the economy and likely raise unemployment.
We are very pleased that President Biden plans to reappoint Jerome Powell as chairman of the Federal Reserve Bank. With all the economic uncertainty from the COVID omicron variant, rising inflation, supply-chain struggles and fiscal imbalances, this is not the time to rock the boat at the Fed with a new and untried leader.
Chairman Jerome Powell said Tuesday that the Federal Reserve will consider acting more quickly to dial back its ultra-low-interest rate policies to counter higher inflation. His remarks quickly accelerated losses on Wall Street.
Federal Reserve Chair Jerome Powell says that the appearance of a new COVID-19 variant could slow the economy and hiring.
