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.
Featured Coverage of this Story
From the CenterFed Chair Powell says interest rates are ‘likely to be higher’ than previously anticipated
Federal Reserve Chairman Jerome Powell on Tuesday cautioned that interest rates are likely to head higher than central bank policymakers had expected.
Citing data earlier this year showing that inflation has reversed the deceleration it showed in late 2022, the central bank leader warned of tighter monetary policy ahead to slow a growing economy.
“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 remarks prepared for two appearances this week on Capitol Hill. “If the...
From the LeftTwo testy Senate exchanges show the Fed's dilemma
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The big picture: The two unusually testy exchanges were a preview of what is likely to be a key dynamic, both for the central bank and for U.S. political debates heading into the 2024 elections.
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From the RightFed Chair Predicts Rough Ride Ahead for US Economy
The Federal Reserve Chair told members of Congress it could be a "bumpy" ride as they continue to try and get inflation under control.
Chair Jerome Powell said the Fed's goal was still to get inflation down to 2%. The Fed has raised interest rates multiple times over the past year to try and help cool inflation, and Powell says that may need to happen at a faster rate because inflation is still out of control.
"If the totality of the data were to indicate that faster tightening is warranted,...
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