Beautiful Virgin Islands

Tuesday, Jun 03, 2025

Jerome Powell: US central bank boss says he plans to raise rates

Jerome Powell: US central bank boss says he plans to raise rates

The US central bank's boss has indicated that he plans to press ahead with interest rate increases this month.

Speaking in front of Congress, Jerome Powell said he's in favour of a 0.25 point increase, aimed at tackling the surging cost of living.

The bank is under pressure to rein in inflation as prices in the US rise at the fastest rate in 40 years.

Analysts expect a rate hike in March, which would be the first since 2018.

It comes as costs for food, fuel and cars have risen sharply in recent months, leaving families' budgets strained.

Mr Powell admitted that he was open to further interest rate increases further down the line if inflation, which measures how quickly the cost of living rises over time, remains "persistently high."

The idea of raising interest rates is to keep those current and predicted price rises under control.

Higher interest rates make borrowing more expensive, for example. For households, that could mean higher mortgage costs, although - for the vast majority of homeowners - the impact is not immediate, and some will escape it entirely.

Many central banks, including the Federal Reserve in the US, aim to keep inflation contained at 2%.

Mr Powell acknowledged that price increases have jumped far above that target. In January, the increase in the cost of living jumped by 7.5% when compared with a year earlier.

"The inflation that we're experiencing is just nothing like anything we've experienced in decades," he said.

At the start of the pandemic, the Federal Reserve slashed rates to zero in a bid to stimulate spending and the economy at a time when many sectors were shut-down.

But a mix of issues, such as high demand as restrictions ease, labour shortages and supply chain problems have led to increases in the cost of goods in particular.


The chairman of America's central bank Jerome Powell has made it a point during his tenure of trying to demystify what the Federal Reserve does. He is committed to explaining what policymakers are doing and why because of what happened during the 2008 financial crisis.

Even by those standards, he was unusually blunt during his semi-annual Congressional testimony.

Mr Powell telegraphing explicitly what he wants to do at the central bank's next meeting in two weeks: proposing a quarter percentage point rate increase, while moving carefully and watching the economic implications of war in Ukraine.

Even before Russia's invasion, the Fed had a tough job on its hands trying to tame soaring inflation. A series of rate hikes were already expected this year.

But the conflict in Ukraine has complicated that job. The invasion is likely to undermine global growth while pushing up prices, especially for energy and food.

Given the uncertainty, Mr Powell is taking the view that a cautious approach is best and is putting all his cards on the table.

'Significant hardship'


The chair recognised that "high inflation imposes significant hardship" on people and said the Bank will use all its tools to ensure the increased prices do not become "entrenched".

The Fed is not alone in its plans to raise interest rates from their current levels. The Bank of England raised interest rates twice in three months and drew outrage when its boss asked workers not to ask for a pay rise to try to stop prices rising out of control.

Looking ahead, Jerome Powell said that the Fed expects inflation "to decline over the course of the year as supply constraints ease... we are attentive to the risks of potential further upward pressure" on prices.

He cautioned, however, that the invasion of Ukraine, and sanctions imposed by Western countries, create a great deal of uncertainty around the prices of wheat, oil, and other goods.

"The near-term effects on the US economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain," he said in his semi-annual testimony to Congress.

"We will be monitoring the situation closely."

On Wednesday, oil prices surged again despite the US and other members of the International Energy Agency agreeing to release 60 million barrels of emergency stockpiles.

Russia is one of the world's largest oil and gas exporters, but US President Biden has not ruled out banning imports from the country.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
China Accuses US of Violating Trade Truce
Panama Port Owner Balances US-China Pressures
France Implements Nationwide Outdoor Smoking Ban to Protect Children
German Chancellor Merz Keeps Putin Guessing on Missile Strategy
Mandelson Criticizes UK's 'Fetish' for Abandoning EU Regulations
British Fishing Boat Owner Fined €30,000 by French Authorities
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
×