Beautiful Virgin Islands

Sunday, Oct 06, 2024

Powell signals Fed may take its foot off the gas on rate hikes following banking turmoil

Powell signals Fed may take its foot off the gas on rate hikes following banking turmoil

Federal Reserve chair says credit crunch could ease rate increases

Federal Reserve Chairman Jerome Powell said Friday the central bank may not need to hike interest rates as aggressively as it previously planned in its ongoing fight against inflation after the regional banking crisis made it more difficult to access credit.

Powell said during a panel discussion on monetary policy held by the Fed that "overall the banks and the banking system are strong and resilient," but acknowledged that the disruption to the financial sector from a series of bank runs in recent months could impact the central bank's policy decisions.

"Developments there, on the other hand, are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring and inflation," the Fed chair said. "So as a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals. Of course, the extent of that is highly uncertain."

Earlier this month, the Fed hiked rates for the 10th consecutive time, putting the key benchmark federal funds rate at a range of 5% to 5.25% – the highest in 16 years. But for the first time in a year, policymakers signaled that future rate increases are not a given, suggesting that additional policy moves will hinge on "incoming information."

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington, D.C., on March 22, 2023.


"A decision on a pause was not made today," Powell told reporters during a post-meeting press conference at the time, though he noted the "meaningful" change in the official statement.

"We're no longer saying that we 'anticipate,'" he said. "We'll be driven by incoming data, meeting to meeting. We'll approach that question at the June meeting."

Then, the Fed released a survey last week indicating that more banks are tightening their lending standards in the wake of recent turmoil within the financial sector, following the high-profile bank runs on Silicon Valley Bank and a handful of other regional lenders.

A worker (C) tells people that the Silicon Valley Bank (SVB) headquarters is closed on March 10, 2023 in Santa Clara, California.


Mid-sized banks are struggling, in part, from higher interest rates, as the Fed carries out its most aggressive tightening campaign since the 1980s.

Although inflation has eased from a peak of 9.1%, it remains about more than double the pre-pandemic average and well above the Fed's 2% target rate.

Powell reiterated Friday that the Fed is committed to returning to that goal, saying "failure to get inflation downward would not only prolong the pain, but also increase ultimately the social costs of getting back to price stability, causing even greater harm to families and businesses."

Comments

Oh ya 1 year ago
They are caught, protect the dollar or protect the market. A crashing economy or high inflation are the 2 options. Years of cheap almost free money in the form of interest rates are going to bite everyone. Buckle up

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Facilitated Communication: Miracle Tool or Manipulative Method?
The Allure of Browsing Online Property Portals: A Modern Obsession
Suspected Acid Attacker in London Bailed Amid Investigation
Tragic Channel Crossing: Four Migrants Killed
Labour Cabinet Ministers' Stances on Assisted Dying
The Influence of Tory Members on Party Leadership
UK Plans Major Overhaul of Employment Rights
UK Food Industry Lobbying Delays £1.7 Billion Plastic Packaging Tax
New UK Tipping Law Sparks Confusion Among Restaurant Staff
Debate Heats Up Over Assisted Dying Legislation in the UK
New Personalized Cancer Therapies Undergo Extensive Clinical Study
UAE Energy Minister: OPEC+ Doing a 'Noble' Job in Balancing Oil Market
Call for Wealth Tax Hikes to Curb Reform UK's Rise
Labour MP Supports Chancellor's Rejection of Wealth Tax
Debate Intensifies Over VAT Introduction for UK Private Schools
Israel Plans Retaliation Against Iran Amid Rising Regional Tensions
Norwegian Police Conclude 'Spy Whale' Hvaldimir's Death Due to Infection
Dominica Sells Citizenship to Boost Climate Resilience
Greta Thunberg Detained in Brussels During Protest Against Fossil Fuel Subsidies
UK Returns Chagos Islands to Mauritius After Decades-Long Dispute
UK Reaffirms Commitment to Overseas Territories Amid Falkland Islands Dispute
France's Silent March Supports Gisèle Pelicot: A Shocking Case
Robert Jenrick's Leadership Prospects: Challenges from the Right
Declining Interest in Grammar Schools Amid VAT Concerns
Emirates Bans Pagers and Walkie-Talkies on All Flights
Malaysian Father Burns Son's Motorbike to Prevent Racing Accidents
Donald Trump Urges Israel to Hit Iran's Nuclear Facilities First
Private Schools Face Enrollment Decline Due to Impending VAT on Fees
Wetherspoon’s CEO Criticizes Smaller Beer Glass Proposal and Licensing Hour Reduction
Starmer Defends UK Chagos Islands Decision Amidst Tory Criticism
Naomi Campbell Banned from Charity Work After Fashion for Relief Mismanagement
Sky News Cancels Boris Johnson Interview Over Recording Restriction
Hurricane Kirk's Remnants to Bring Stormy Weather to UK
Toyota Postpones US Electric Vehicle Production Amid Slowing EV Sales
EU Imposes Tariffs on Chinese Electric Vehicles
Royal Navy Submarine Service Exposed for Misogyny and Bullying
UK Government Organizes New Evacuation Flight for Britons in Lebanon
EU Car Industry Faces Severe Downturn
UK to Return Chagos Islands to Mauritius After Long Dispute
EU Imposes Tariffs on Chinese Electric Vehicles
Antarctica's Rapid Transformation: From Ice to Green
Boeing Starliner's Delayed Mission Extends NASA Astronauts' ISS Stay
Spanish F-18 Fighter Jet Crash Claims Pilot's Life
US Army Tests Armed Robot Dogs in the Middle East
Israeli Family Adopts Niece After Hamas Attack
French Court Allows Public Viewing of Video Evidence in Mass Rape Trial
Elon Musk's X Faces Fines and Account Error in Brazil
Boris Johnson Claims He Found Listening Device in Bathroom After Netanyahu's Visit
Iran's Supreme Leader Khamenei declared today: "If Israel retaliates, we will raze Tel Aviv and Haifa to the ground."
Scott Jennings leaves CNN panel speechless as he tears apart Tim Walz's flimsy excuse of being "too dumb to tell the truth."
×