{"id":1392360,"date":"2022-03-21T15:15:33","date_gmt":"2022-03-21T19:15:33","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1392360"},"modified":"2022-03-21T15:15:39","modified_gmt":"2022-03-21T19:15:39","slug":"fed-chair-aggressive-rate-hikes-may-be-needed-to-tame-inflation","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fed-chair-aggressive-rate-hikes-may-be-needed-to-tame-inflation\/","title":{"rendered":"Fed Chair: Aggressive Rate Hikes May Be Needed To Tame Inflation"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ffed-chair-aggressive-rate-hikes-may-be-needed-to-tame-inflation%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1392360&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><\/div>\n<p>By Ann Saphir and Lindsay Dunsmuir<\/p>\n<p>(Reuters)\u2014The U.S. central bank must move &#8220;expeditiously&#8221; to bring too-high inflation to heel, Federal Reserve Chair Jerome<span class=\"highlight\" data-qa-component=\"highlight-text\">\u00a0Powell\u00a0<\/span>said on Monday, and will, if needed, use bigger-than-usual interest rate hikes to do so.<\/p>\n<p>&#8220;The labor market is very strong, and inflation is much too high,&#8221;<span class=\"highlight\" data-qa-component=\"highlight-text\">\u00a0Powell\u00a0<\/span>told a National Association for Business Economics conference. &#8220;There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability.&#8221;<\/p>\n<p>In particular, he added, &#8220;if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so.&#8221;<\/p>\n<p>Fed policymakers last week raised interest rates for the first time in three years and signaled ongoing rate hikes ahead. Most see the short-term policy rate \u2013 pinned for two years near zero \u2013 at 1.9% by the end of this year, a pace that could be achieved with quarter-percentage-point increases at each of their next six policy meetings.<\/p>\n<p>By the end of next year, Fed policymakers expect the central bank&#8217;s benchmark overnight interest rate to be at 2.8%, bringing borrowing costs to a level where they would actually start biting into growth. Most Fed policymakers see the &#8220;neutral&#8221; level as somewhere between 2.25% and 2.5%.<\/p>\n<p><span class=\"highlight\" data-qa-component=\"highlight-text\">Powell\u00a0<\/span>repeated on Monday that the Fed&#8217;s reductions to its massive balance sheet could start by May, a process that could further tighten financial conditions.<\/p>\n<p>U.S. stocks extended earlier losses after his remarks and traders boosted bets that the Fed will deliver a half-percentage-point rate hike at its policy meeting in May.<\/p>\n<p>&#8220;This is not just going to be a near-term tactical phenomenon,&#8221; said Kevin Flanagan, head of fixed income strategy at WisdomTree Investments in New York. &#8220;This is a more strategic type of messaging, I think, from the Fed.&#8221;<\/p>\n<p>A consensus for more aggressive tightening \u2013 or at least an openness to it \u2013 appears to be growing.<\/p>\n<p>Atlanta Fed President Raphael Bostic, who expects a slightly gentler path of rate increases than most of his colleagues, said earlier on Monday he is open to bigger-than-usual rate hikes &#8220;if that&#8217;s what the data suggests is appropriate.&#8221;<\/p>\n<p>Speaking on Friday, Fed Governor Chris Waller said he would favor a series of half-percentage point rate increases to have a quicker impact on inflation.<\/p>\n<p>The U.S. unemployment rate currently is at 3.8% and per-person job vacancies are at a record high, a combination that&#8217;s pushing up wages faster than is sustainable.<\/p>\n<p>&#8220;There\u2019s excess demand,&#8221;<span class=\"highlight\" data-qa-component=\"highlight-text\">\u00a0Powell\u00a0<\/span>said, adding that &#8220;in principle&#8221; less accommodative monetary policy could reduce pressure in the labor market and help stabilize inflation without pushing up unemployment, generating a &#8220;soft landing&#8221; rather than a recession.<\/p>\n<p>INFLATION RISKS<\/p>\n<p>Inflation by the Fed&#8217;s preferred gauge is three times the central bank&#8217;s 2% goal, pushed upward by snarled supply chains that have taken longer to fix than most had expected and that could get worse as China responds to new COVID-19 surges with fresh lockdowns.<\/p>\n<p>Adding to the pressure on prices, Russia&#8217;s war in Ukraine is pushing up the cost of oil, threatening to move inflation even higher. The United States, now the world&#8217;s biggest oil producer, is better able to withstand an oil shock now than in the 1970s,<span class=\"highlight\" data-qa-component=\"highlight-text\">\u00a0Powell\u00a0<\/span>noted.<\/p>\n<p>Although the Fed in normal times would not likely tighten monetary policy to address what in the end may be a temporary spike in commodity prices,<span class=\"highlight\" data-qa-component=\"highlight-text\">\u00a0Powell\u00a0<\/span>said, &#8220;the risk is rising that an extended period of high inflation could push longer-term expectations uncomfortably higher.&#8221;<\/p>\n<p>Last year, the Fed repeatedly forecast that supply chain pressures would ease and then was repeatedly disappointed.<\/p>\n<p>&#8220;As we set policy, we will be looking to actual progress on these issues and not assuming significant near-term supply-side relief,&#8221;<span class=\"highlight\" data-qa-component=\"highlight-text\">\u00a0Powell\u00a0<\/span>said on Monday. Policymakers began this year expecting inflation would peak this quarter and cool in the second half of the year.<\/p>\n<p>&#8220;That story has already fallen apart,&#8221;<span class=\"highlight\" data-qa-component=\"highlight-text\">\u00a0Powell\u00a0<\/span>said. &#8220;To the extent it continues to fall apart, my colleagues and I may well reach the conclusion we&#8217;ll need to move more quickly and, if so, we&#8217;ll do so.&#8221;<\/p>\n<p>Fed policymakers hope to rein in inflation without stomping on growth or sending unemployment back up, and their forecasts released last week suggest they see a path for that, with the median view for inflation falling to 2.3% by 2024 but unemployment still at 3.6%.<\/p>\n<p><span class=\"highlight\" data-qa-component=\"highlight-text\">Powell\u00a0<\/span>said he expects inflation to fall to &#8220;near 2%&#8221; over the next three years, and that while a &#8220;soft landing&#8221; may not be straightforward, there is plenty of historical precedent.<\/p>\n<p>&#8220;The economy is very strong and is well-positioned to handle tighter monetary policy,&#8221; he said.<\/p>\n<p>(Reporting by Ann Saphir and Lindsay DunsmuirAdditional reporting by Herb LashEditing by Paul Simao)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Ann Saphir and Lindsay Dunsmuir (Reuters)\u2014The U.S. central bank must move &#8220;expeditiously&#8221; to bring too-high inflation to heel, Federal Reserve Chair Jerome\u00a0Powell\u00a0said on Monday, and will, if needed, use<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1392360","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1392360","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1392360"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1392360\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1392360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1392360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1392360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}