The Fed, led by Jerome Powell, has begun to believe that raising interest rates “may have fewer effects than in the past.”

The Fed, led by Jerome Powell, has begun to believe that raising interest rates “may have fewer effects than in the past.”

After several unexpectedly high inflation readings, Fed officials concluded at a meeting earlier this month that it would take longer than they previously thought for inflation to cool enough to justify cutting its key interest rate, which is now at its highest level in recent years. 23 years old.

Minutes of the May 1 meeting released on Wednesday showed that officials also discussed whether the key interest rate was exerting enough pressure on the economy to further slow inflation. Several officials indicated they were unsure how restrictive the Fed’s interest rate policies would be, the minutes said. This suggests that it was not clear to policymakers whether they were doing enough to restrict price growth.

Higher interest rates “may have smaller impacts than in the past,” the minutes said. Economists note that many American homeowners, for example, refinanced their mortgages during the pandemic and maintained very low mortgage interest rates. Most major companies also refinanced their debt at lower interest rates, softening the impact of the Fed’s 11 interest rate hikes in 2022 and 2023.

Such concerns have raised speculation that the Fed may consider raising its benchmark interest rate rather than lowering it in the coming months. In fact, the minutes noted that “various” officials had “indicated their willingness” to raise interest rates if inflation accelerated.

But in a news conference immediately after the meeting, Chairman Jerome Powell said it was “unlikely” that the Fed would resume raising its benchmark interest rate — a remark that temporarily buoyed financial markets.

In the current situation After the May 1 meeting, Fed officials admitted that the country’s progress in lowering inflation had stalled in the first three months of this year. As a result, they said, they would only start cutting the key interest rate after they had “more confidence” that inflation is steadily returning to their 2% target. A lower interest rate by the Fed would ultimately lead to lower costs for mortgages, auto loans and other forms of consumer and corporate borrowing.

Powell also said at the time that he still expected inflation to decline further this year. But he added: “I have less confidence in that than it would have been because of the data we’ve seen.”

From a peak of 7.1% in 2022, inflation as measured by the Federal Reserve’s preferred measure has slowed steadily through most of 2023. But over the past three months, that measure has been running faster than is consistent with the central bank’s inflation target.

Excluding volatile food and energy costs, prices rose at an annual rate of 4.4% in the first three months of this year, according to the Federal Reserve’s gauge, sharply higher than the 1.6% pace in December. This acceleration has dampened hopes that the Fed will soon be able to cut its key interest rate and achieve a “soft landing,” where inflation falls to 2% and a recession is avoided.

However, a separate report on inflation last week from the government showed that price pressures slowed slightly in April. Although a group of Fed spokesmen this week welcomed a more moderate inflation report in April, they stressed that more such readings are needed to enable them to cut interest rates.

Christopher Waller, a senior member of the Fed’s Board of Governors, said Tuesday that he “will need to see several more months of good inflation data before” he supports cutting interest rates. This suggests that the Fed will likely not consider cutting interest rates until September at the earliest.

Subscribe to the CFO Daily Newsletter to keep up with the trends, issues and executives shaping corporate finance. Register for free.

Leave a Reply

Your email address will not be published. Required fields are marked *

redtubetamil pornude.mobi freeindianporn
horse sex clips wetwap.info bp
kannar booketube.mobi lunki
the boobay and tekla show tvteleserye.net a family affair august 3
indian fuc zambibo.mobi vasxxx
kannada fuck video porncorntube.net old movies telugu
blood sex movie momyporn.mobi keralasexygirls
arram full movie sfico.info beegcom
xxxxxxvibeo captaintube.info hot indian xvideos
the broken marriage vow may 6 2022 full episode superpinoy.net gmanetwork com maria clara at ibarra
vijayawada sex com dunato.mobi www.indian sex vedios.com
indian deshi sex indianhottube.com boor sexy
sister cleaire hentai-site.net dressblackheulee
نيك اغتصاب عنيف freearabianporn.com اجمل نيك فى الطيز
xhamster incest hotindianporn.mobi sivi tamil movie free download