The Federal Reserve could raise interest rates HIGHER and faster than expected to fight inflation and Biden’s fiscal policies are NOT responsible for the rise in prices, Chairman Jerome Powell tells Senators
- Powell told the banking committee “final interest rate levels are likely to be higher than previously expected”
- The Fed’s target range for interest rates is currently 4.5 to 4.75 percent
The Federal Reserve could continue with rate hikes if inflation doesn’t start to come down faster and the economy doesn’t cool, Chairman Jerome Powell told senators on the banking committee on Tuesday.
He also warned that rate hikes could happen more often and argued that Congressional spending had little to do with price hikes.
In response to a question from Senator John Kennedy, R-La., about what Congress could do to help fight inflation, Powell said, “I do not think so fiscal policy right now is a big factor driving inflation right now.”
It’s a remarkable comment, given that the Fed chairman typically tries to refrain from commenting on fiscal policy.
But Kennedy brushed off Powell’s comment in comments on DailyMail.com after the hearing.
“He just doesn’t get involved in the debt limit policy discussions,” the Louisiana Republican said.
“Powell knows it as well as I do… the US has never been able to achieve disinflation all the way back to 1950 without attacking it on both the fiscal and monetary sides,” Kennedy continued. “But I understand why he wants to walk around that.”
Powell told the committee “that the eventual level of interest rates is likely to be higher than previously expected,” and “If the totality of the data indicates that faster tightening is warranted, we would be prepared to slow down the pace of interest rate hikes.” to feed. .’
The Fed’s target range for interest rates is currently 4.5 to 4.75 percent. According to the Consumer Price Index, prices in January were 6.4 percent higher than the previous year and 0.5 percent higher than the previous month. That was slightly lower than December’s numbers, but still much higher than the Fed’s target.
The Federal Reserve could continue with rate hikes if inflation doesn’t start to come down faster and the economy doesn’t cool, Chairman Jerome Powell told senators on the banking committee on Tuesday.
The central bank raised its reference rate by a quarter point beginning of February after imposing a half point raise in December and four three-quarter point raises before that.
In the past year, the central bank has raised its policy rate, which affects many consumer and business loans, eight times.
Economists had expected the Fed to raise rates by 0.25 percent, 25 basis points, at its next meeting on March 21-22. Powell’s comments now suggest the increase could be as high as 50 basis points.
Senator Sherrod Brown, chairman of the Banking Committee, slammed the Fed’s continued rate hikes. “This is a complex issue and interest rates are a single, bot too,” said Brown, D-Ohio.
Powell also warned that rate hikes could happen more often
“Raising interest rates certainly won’t stop big companies from exploiting all these crises to drive up prices well beyond the increase in their costs,” he added, while he points out other factors contributing to inflation, such as the Russian war against Ukraine.
Senator Tim Scott, a top Republican on the committee, hit back that the Fed wouldn’t have to institute these increases if Congress kept its federal spending under control.
“We will continue to make our decisions meeting by meeting,” Powell said. “While inflation has been moderating in recent months, the process of bringing inflation back to 2% has a long way to go and is likely to be bumpy.”
