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Over the last several weeks, there was a building expectation that the Federal Reserve would be done sooner than later with its interest rate hikes. Chairman Powell dashed those hopes last week when he said, "We will keep at it until we are confident the job is done."
While rate increases would bring down inflation, Mr. Powell said, "they will also bring some pain to households and businesses." He added, "These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."
Mr. Powell cited projections Fed officials made in June in which most thought they would need to raise rates to slightly below 4% through the end of next year. This thinking pushed back against some investors' expectations that the Fed would pivot faster to cutting rates next year.
Markets are awaiting the Fed's next meeting in September to see if the rate-setting Federal Open Market Committee will enact a third consecutive 0.75 percentage point increase.
Powell Says Fed Must Show Resolve in Fighting Inflation
by Nick Timiraos
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