Last month’s progress in easing overall inflation was tempered by an elevated reading of “core” prices, a category that excludes volatile food and energy costs.
Such proposals are likely to face resistance from the banking industry and some congressional Republicans, who argue that the Fed had the necessary tools to prevent the bank collapses but failed to use them.
Speaking on Capitol Hill for a second day, Federal Reserve Chair Jerome Powell said returning U.S. inflation to 2% is crucial to support the long-term health of the U.S. economy.
The contrast between the Fed’s stated concern over still-high inflation and its decision to skip a rate hike has heightened uncertainty about its next moves.
The two days of hearings before Congress will likely focus on the question that consumed the central bank last week: How far and how fast will the Fed raise its key interest rate from here?
Chair Jerome Powell offered a nuanced view Wednesday of how the Federal Reserve intends to address its core challenge at a time when inflation is both way below its peak but still well above the central bank’s 2% target.
The Fed’s move to leave its benchmark rate at about 5.1%, its highest level in 16 years, suggests that it believes the much higher borrowing rates it’s engineered have made some progress in taming inflation.
The Federal Reserve, having raised interest rates at the fastest pace in four decades, is poised Wednesday to leave rates alone for the first time in 15 months to allow time to gauge the impact of its aggressive drive to tame inflation.
An emerging pullback should be welcome news for the Federal Reserve, which has been taking aggressive steps for more than a year to slow the economy enough to bring down inflation.
When the Federal Reserve meets next week, it is widely expected to leave interest rates alone—after 10 straight meetings in which it has jacked up its key rate to fight inflation. But that doesn’t mean its done with hikes.
The resilience of the American labor market continues to complicate the Federal Reserve’s efforts to fight inflation.
The stubbornness of high inflation is dividing the Federal Reserve over how to manage interest rates, leaving the outlook for the Fed’s policies cloudier than at any time since it unleashed a streak of 10 straight rate hikes.
April’s hiring gain compares with 165,000 in March and 248,000 in February and is still at a level considered vigorous by historical standards.
The Federal Reserve said it will consider a range of factors in “determining the extent” to which future hikes might be needed.
Another quarter-point rate increase on Wednesday would leave the Fed’s key rate at 5.1%—a 16-year high and a full 5 percentage points higher than in March 2022.
With help from a national pilot group that includes three Indiana-based banks, the Federal Reserve will soon launch the service, called FedNow.
Christopher Waller, a member of the Federal Reserve’s governing board, said there has been little progress on inflation for more than a year.
America’s employers added a solid 236,000 jobs in March, suggesting that the economy remains on solid footing despite the nine interest rate hikes the Federal Reserve has imposed over the past year in its drive to tame inflation.
Signs of a possible credit crunch in the United States had begun to emerge even before Silicon Valley Bank collapsed on March 10, raising worries about the stability of the financial system.
The Fed warned that the financial upheaval stemming from the collapse of two major banks is “likely to result in tighter credit conditions” and “weigh on economic activity, hiring and inflation.”