Federal Reserve Chair Jerome Powell said the pace of future interest rate hikes will depend on whether — and how quickly — inflation starts to decline, something the Fed will assess on a “meeting by meeting” basis.
WASHINGTON — Federal Reserve Chair Jerome Powell on Wednesday underscored the Fed’s determination to raise interest rates high enough to slow inflation, a commitment that has fanned concerns that the central bank’s fight against surging prices could tip the economy into recession.
The Fed’s accelerating pace of rate increases — it started with a quarter-point hike in its key short-term rate in March, then a half-point increase in May, then three-quarters of a point last week — has alarmed investors and led to sharp declines in the financial markets. Biden is expected on Wednesday to call on Congress to suspend U.S. gas and diesel taxes to reduce the sting of high fuel prices, which are averaging nearly $5 a gallon. Many economists are skeptical that consumers will see the full benefit of a tax holiday on the 18.4 cent per gallon gas tax.
Warren said that Biden’s efforts to fight inflation, such as trying to clear clogged supply chains and increasing the use of antitrust rules to break up monopolies, would more effectively fight higher prices.Fed rate hikes, though, can only slow demand, which will raise unemployment and weaken growth, Warren said.
Fed officials hope that such changes will help achieve their goals of cooling demand enough to slow the economy and moderate price increases. In his testimony, Powell said the higher interest rates “should continue to temper growth and help bring demand into better balance with supply.”
Ireland Latest News, Ireland Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Risk of US recession doubled since Fed’s latest rate hike: Goldman SachsThe risk of the US economy sliding into a recession this year doubled last week after the Federal Reserve implemented its sharpest interest rate hike since 1994, according to Goldman Sachs economis…
Read more »
EUR/USD Forex Signal: Euro Rebound LikelyThe EUR/USD price retreated as the strength of the US dollar continued following last week\u2019s Federal Reserve interest rate decision.
Read more »
Powell says U.S. economy can handle the additional rate hikes that are coming“The American economy is very strong and well positioned to handle tighter monetary policy,” Federal Reserve Chairman Jerome Powell said. “We anticipate that ongoing rate increases will be appropriate.”
Read more »
Powell Says Fed Will Continue Hiking Rates Until There Is ‘Clear Proof’ That Inflation Is Slowing“We are strongly committed to bringing inflation back down,” Powell told Congress.
Read more »