After a Fed meeting on Wednesday, Jerome Powell’s message was mixed: resolute on rising inflation but optimistic that the costs of confronting it will be relatively small.
that Powell received were pointed. One of his interlocutors, Edward Lawrence, of Fox Business, pointed out that in 1981, when the Fed was confronting a big inflation spike, the federal funds rate was raised to more than nineteen per cent. Even after Wednesday’s quarter-point hike, the funds rate stands at just 0.25 per cent. Internal projections that the Fed released after Wednesday’s meeting show that Powell and his colleagues expect to raise the rate to 1.
The Fed’s internal projections suggest that it will raise the funds rate again at each of its six remaining policy meetings this year. It is “certainly a possibility,” Powell said, that one or more of these rate hikes could be half a percentage point, rather than a quarter. By prompting a further rise in the price of oil and other commodities, thewill “put additional upward pressure on near-term inflation here at home,” he noted.
In other words, Powell’s message was mixed: resolute on rising inflation but optimistic that the costs of confronting it will be relatively small. This optimism appeared to, who pushed the Dow up more than five hundred points on Wednesday, but it didn’t resolve some questions about the plausibility of the scenario that Powell and his colleagues presented for the economy, which is often referred to as a “soft landing.
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