Federal Reserve officials are set to increase their 2023 unemployment projections for a third straight time amid warnings that their inflation-fighting campaign increasingly risks tipping the US economy into a recession.
Federal Reserve Vice Chair Lael Brainard said the US central bank will need to keep interest rates high for some time to bring inflation down, even as she acknowledged the need to watch global financial-stability risks from rising borrowing costs.
Federal Reserve officials raised interest rates by 75 basis points for the third consecutive time and forecast they would reach 4.6% in 2023, stepping up their fight to curb US inflation that’s persisted near the highest levels since the 1980s.
Two-year Treasury yields. rose as investors digested the remarks, pushed as high as 3.44% while the 2- to 10-year yield curve resumed its flattening. Equities were lower.
Federal Reserve officials stressed the need to keep raising interest rates even as they reserved judgment on how big they should go at their meeting next month.
Federal Reserve Chair Jerome Powell sees two possible paths for the economy and monetary policy over the next year: With some luck, inflation will cool with the help of more supply. And if that fails, the Fed won’t hesitate to impose a more painful solution.
Central bankers can’t drill for oil, grow more crops or repair global supply chains. That means the only quick fix available to Federal Reserve Chair Jerome Powell and his colleagues for cooling the fastest inflation in four decades may be raising interest rates so much that they crash the economy into recession.
Federal Reserve Chair Jerome Powell, in his most hawkish remarks to date, said the US central bank will keep raising interest rates until there is “clear and convincing” evidence that inflation is in retreat.
Federal Reserve officials intensified their battle against the hottest inflation in a generation by shifting to end their asset-buying program earlier and signaling they favor raising interest rates in 2022 at a faster pace than expected.
The U.S. is poised to enter Year Three of the pandemic with both a booming economy and a still-mutating virus. But for Washington and Wall Street, one Covid aftershock is eclipsing almost everything else.
Federal Reserve Chair Jerome Powell said officials should weigh removing pandemic support at a faster pace and he retired the word “transitory” to describe stubbornly high inflation, though a new Covid-19 strain remains a risk.
In the second year of a pandemic that began by wiping out 20 million jobs, American workers are doing surprisingly well. It’s just that American business is doing even better.
Federal Reserve Chair Jerome Powell said officials can be patient on raising interest rates -- after announcing a start to reducing their bond purchases -- but won’t flinch from action if warranted by inflation.
Once ideas about how to manage the economy become entrenched, it can take generations to dislodge them. Something big usually has to happen to jolt policy onto a different track. Something like Covid-19.
To get an idea of what Jerome Powell’s Federal Reserve will do next, Wall Street economists are having to try their hand at forecasting new variables -- like the Black unemployment rate.
The unprecedented $9 trillion rescue mission by central banks to haul the world economy from its coronavirus recession is being tested as rising bond yields and inflation bets threaten their ability to keep borrowing costs down.
Joe Biden’s administration has dedicated its first few weeks in office to spending more money on pandemic relief -- and shrugged off warnings that the economy may overheat as a result.
Shutting down the U.S. economy was appropriate in the early days of the COVID-19 crisis, but now the country needs to shift to mitigating risks, as it does with risks from terrorism or auto accidents, says James Bullard.
