![]() Hailing a late 2022 and early 2023 slowing down of inflation, Federal Reserve Chairman Jerome Powell has now announced the need for a quarter percentage point rise in interest rates. With the rate set to reach 4.7%, the highest in 5 years, Powell warned that despite recent progress, inflation still has the potential to enfeeble the nation’s economy. “Inflation data received over the past three months show a welcome reduction in the monthly pace of increase,” remarked Powell in a news conference. While such developments are encouraging, he added, “we will need substantially more evidence to be confident that inflation is on a sustained downward path.” “Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” remarked Powell. “Without price stability, the economy does not work for anyone.” Added Powell: “In particular, without price stability we will not achieve a sustained period of labor market conditions that benefit all.” The FED rate has been on a steady upward climb for the most part of a year now, from 0.5% in March of 2022 to 4.0% in September and 4.5% at the end of last year. The Federal Reserve’s rate hike, notes the Wall Street Journal, comes as the agency “signaled it was on track to do so again at its next meeting next month, while officials consider whether and when to pause increases late this spring.” “The shift to a quarter-point increase marked a return to a slower, more orthodox pace of rate rises after the Fed rapidly ratcheted up borrowing costs last year,” remarked the Financial Times, “and reflected the fact that inflation appears to have peaked while the economy is starting to slow.” In his press conference remarks, Powell also noted that it will “take time for the full effects of monetary restraints to be realized, especially on inflation.” Restoring price stability, Powell added, “is essential to set the stage for achieving maximum employment and stable prices over the longer run. This historical record cautions strongly against prematurely loosening policy. We will stay the course, until the job is done.” By Garry Boulard
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