The Fed’s move to raise its benchmark interest rate by another quarter of a percentage point was widely expected, and it’s supposed to slow the economy further in hopes of getting inflation under control.
So instead of sounding like a “hawk,” which is what Wall Street calls policy makers who want higher interest rates, or a “dove” who favours lower interest rates, Powell may have come off as something in between.“He really seemed to jump from hawkish straight to not dovish, but chicken as far as: They don’t know what’s going to happen,” said Brian Jacobsen, chief economist at Annex Wealth Management.
The Fed is in a tricky position, though, because inflation remains well above the Fed’s 2 per cent target, and it’s still hurting households trying to keep up. Lower-income households have been squeezed particularly hard. Shares of PacWest Bancorp, Western Alliance Bancorp and other rivals fell again following the Fed’s decision, a day after seeing trading of their stocks get halted amid steep slides. PacWest sank 2 per cent after being up earlier in the day. Western Alliance fell 4.4 per cent.
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