Federal Reserve Chairman Jerome Powell had some relatively soothing words for the markets after the Fed on Wednesday raised its target fed funds rate by 0.5% to a new range of between 0.75% and 1.0%. This was the first rate hike of at least half a percentage point in more than 20 years.
What Happened: During a news conference following the announcement, the chairman said that a future rate hike of 75 basis points at a Fed meeting is not currently being “actively” considered. Although he noted that as part of the continuing effort to reduce inflation, additional 50 basis point rate hikes remain on the table at the next couple of Fed meetings, according to Benzinga Pro.
Also Read: 5 Things You Might Not Know About Federal Reserve Chair Jerome Powell
“Inflation is much too high, and we understand the hardship it is causing," Powell noted. "We’re moving expeditiously to bring it back down.”
He also pointed out inflation was being felt most directly by lower-income people and said the Fed is “strongly committed to restoring price stability.”
Powell acknowledged disruption to supply in the economy has been larger and longer-lasting than the Fed expected. But, at the same time, the American economy “is very strong and well-positioned to handle tighter monetary policy.” Some economists have voiced concern about the Fed's hawkish stance, in light of GDP falling 1.4% in the first quarter.
Powell's most reassuring comments may have been that he anticipates a “soft or softish” landing for the economy, despite the anticipated sequential rate hikes this year.
Photo: Courtesy of International Monetary Fund on Flickr
