People spending less on hotels, flights, restaurants and more
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.
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.”
The Federal Reserve will have to decide whether to extend its year-long streak of rate hikes despite the jitters roiling the financial industry.
Even though prices are rising much faster than the Fed wants, some economists expect the central bank to suspend its year-long streak of interest rate hikes when it meets next week.
The worry is the collapse of SVB and Signature Bank are just the start of a longer list of casualties from the Fed’s shift to the highest rates since policymakers began slashing borrowing costs in 2007.
Jerome Powell’s more nuanced remarks Wednesday appeared to be an effort to quell any assumption that the Fed has already decided to raise rates more aggressively based on a recent string of data that pointed to strong economic growth and still-high inflation.
Jerome Powell’s comments reflect a sharp change in the economic outlook since the Fed’s most recent policy meeting in early February.
Most economists and Wall Street investors had expected the Fed to carry out another quarter-point increase when it next meets March 21-22. But in recent days, traders have been pricing in a greater likelihood of a half-point increase.
U.S. central bankers are waging their most aggressive action against high inflation in a generation.
January’s price data exceeded forecasters’ expectations, confounding hopes that inflation was steadily decelerating and that the Fed could relent on its campaign of rate hikes.