Powell isn’t likely to say whether the Fed will continue raising rates. But he may signal that any rate cuts are unlikely until well into next year. The central bank has already helped drive inflation down from painfully high levels. But Fed officials have said they need to keep rates high to further slow borrowing and spending and reduce inflation to their 2% target.
Many analysts say that despite the progress the Fed has made so far, Powell can’t afford to let down his guard and say anything that would sound like a declaration of victory. They instead expect him to signal that he intends to keep rates at high levels for as long as needed. Even if the Fed’s policymakers don’t further increase borrowing costs, they’re unlikely to reduce them anytime soon.
Surprisingly, despite the Fed’s aggressive rate hikes, the U.S. unemployment rate stands exactly where it did when Powell spoke last year: 3.5%, barely above a half-century low. Still, Rajan said he doubts the Fed can achieve its 2% inflation goal without causing some rise in unemployment. A higher jobless rate would likely slow wage growth and ease inflation pressures. When layoffs spread, workers are typically less able to gain big pay raises.
Loans Loans Latest News, Loans Loans Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: AP - 🏆 728. / 51 Read more »