![]() ![]() ![]() 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. But they also raise the risk that the economy will fall into a recession. Higher rates can discourage consumers from spending and thereby cool the economy and inflation. When the Fed raises its key short-term rate, it typically leads to more expensive mortgages, auto loans, credit card lending and business loans. The Fed chair had made a similar comment Tuesday to a Senate panel but had not included the caveat that “no decision has been made.” Some economists and Wall Street traders had interpreted those remarks as a signal that the Fed would raise its benchmark rate by a substantial half-point at its March 21-22 meeting.Īs a result, stock prices tumbled Tuesday, and some bond yields rose as markets anticipated a faster pace of rate hikes. “If - and I stress that no decision has been made on this - if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” Powell said on his second day of semi-annual testimony to Congress. WASHINGTON (AP) - Federal Reserve Chairman Jerome Powell stressed Wednesday that the central bank’s policymakers have yet to decide how large an interest rate hike to impose at its next meeting in two weeks in its drive to defeat high inflation.
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