Fed’s Anti-Inflation Rate Hikes Could Accelerate, Powell Says

The Federal Reserve will likely end up raising interest rates to a higher peak than previously expected, Fed Chairman Jerome Powell said Tuesday — continuing the fight against inflation at the risk of triggering a recession.

Key Quotes: “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in prepared remarks ahead of dual House and Senate hearings, adding that “we would be prepared to increase the pace of rate hikes” if the data warranted it. 

Bipartisan Unemployment Concerns: Sens. Elizabeth Warren (D-MA) and John Kennedy (R-LA) both pressed Powell on unemployment risks. Kennedy suggested Powell was “trying to put people out of work,” and Warren said Powell was planning to put “2 million hard-working people” out of work over the next year. Powell pushed back, arguing that high inflation would also hurt working families.

For Context: The Federal Reserve has been raising interest rates to fight persistent inflation by raising the cost of borrowing, which was expected to cool economic activity and quell the forces incentivizing price increases. However, economic activity has remained stronger than the Fed expected, and unemployment is at a record low. The Fed’s goal is to “promote maximum employment” while bringing inflation back down to the standard 2% annual rate; in January, that number was 6.4%.

How the Media Covered It: Coverage was widespread, particularly in business outlets, most of which are rated Lean Left or Center. Reports across the spectrum were generally more likely to highlight Warren’s “heated” comments than Kennedy’s.