Federal Reserve Chair Jerome Powell Tells Congress More Rate Hikes Are On The Way

Federal Reserve On Tuesday, Chair Jerome Powell told lawmakers that the central banks would keep increasing the target. federal funds rate as inflationary pressures remain elevated.

Slowly, interest rates have been increased by policymakers 4.5% Over the last year, there has been a gradual reduction in monetary stimulus during the recession lockdown. Powell stated that a strong labor market and stubborn inflation in certain product categories require further rate increases. prepared remarks Before the Senate Banking Committee.

“We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,” He said. “We are seeing the effects of our policy actions on demand in the most interest-sensitive sectors of the economy. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.”

After the publication of prepared remarks, the Dow Jones Industrial Average dropped 1.2% and the S&P 500 Index fell 11%.

Rationale hikes can increase the cost of borrowing for businesses and consumers, which puts downward pressure on economic activity and prices. Federal Reserve Officials announced The target federal funds rate saw a 0.25 percent increase last month. This is a decrease from previous rate increases of 0.75% or 0.5%. Target interest rates currently range between 4.5% – 4.75%.

Powell confirmed that the Federal Reserve plans to promote a 2.2% inflation rate. This was a level Powell had maintained for the past three decades, prior to the lockdown-induced downturn. According to the Federal Reserve, the Personal Consumption Expenditures price index, which is the preferred price level metric, increased 5.4% from January 2022 to January 2023. However, the version that excludes volatile food and energy items rose 4.7% in the same period. data Source: Bureau of Economic Analysis.

“As supply chain bottlenecks have eased and tighter policy has restrained demand, inflation in the core goods sector has fallen,” Powell responded to the data. “And while housing services inflation remains too high, the flattening out in rents evident in recently signed leases points to a deceleration in this component of inflation over the year ahead.”

In recent months, food prices have been particularly hard on American families: According to Consumer Price Index, expenses for food at home rose 11.3% between Jan 2022 and Jan 2023. data The Bureau of Labor Statistics released this information. It shows that food costs abroad increased 8.2% during the same period. Recent bout Of the Avian Flu has decreased Increased poultry numbers have led to an increase in the cost of chicken and turkey, as well as a significant rise in egg prices.

The effect of inflationary pressures on real wages was 1.5% lower in January 2022 than January 2023. “Strong wage growth is good for workers but only if it is not eroded by inflation,” Powell stated this to legislators.

Joe Biden is the President of the United States. He was inaugurated at 1.4% inflation. reflected As headline inflation has fallen, economic confidence was lower over the past few months.  “When I travel the country, I see optimism for this year and the years ahead,” In a, the commander-in­chief stated statement From the White House “We must finish the job in transitioning to stable and steady growth that benefits all Americans, while laying the foundation for strong and shared growth for years to come.”

“From Federal Reserve Chair Jerome Powell Tells Congress More Rate Hikes Are On The Way“

“The views and opinions expressed here are solely those of the author of the article and not necessarily shared or endorsed by Conservative News Daily”

*As an Amazon Associate I earn from qualifying purchases