With prices rising at their fastest pace in a generation, the Federal Reserve hopes another aggressive rate hike will help it get high inflation under control.
Federal Reserve Chair Jerome Powell maintains the central bank has the tools it needs to bring high inflation under control.
Fed Chair Jerome Powell and his colleagues are trying to do this by tackling demand. They are are pushing up the cost of of credit — what consumers and companies pay to borrow money — and they are trying to deal with a jobs market the Fed chair has called"unsustainably hot," where wages are rising fast because many businesses are paying more to find workers." for the economy, Powell sounded a confident note in recent testimony before Congress.
The central bank is equipped to deal with demand, which surged as the U.S. emerged from the darkest days of the pandemic, but it can't fix supply chain issues or end the war in Ukraine, both of which have led to higher prices, especially of gasoline and food.Powell and his colleagues on the Federal Open Market Committee are closely tracking economic data, but they have been mixed.
Then, there is the stock market. This year, the broad-based S&P 500 is down about 17%, and the tech-heavy Nasdaq, which is in a bear market, has fallen by about 25%. "When you have data points that are in conflict with each other, you have to ask yourself, 'Which ones do you believe?'" he says."Trust the instruments that you believe in."
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