“We’ve had price stability for a very long time, and maybe come to take it for granted - but now we see the pain,” Mr. Judging by inflation, it may even have too much heat, which is why the Fed is trying to cool it to a more sustainable pace. Instead of echoing the anemic slog back from the 2007-9 recession - one that kept millions of applicants out of work and left inflation tepid despite years of rock-bottom rates - the pandemic bounce-back has been vigorous. America’s job market has rebounded rapidly from steep pandemic job losses, and businesses are now struggling to find workers.Ī surge in consumer spending has helped to push the rate of inflation to levels not seen since the 1980s. While the coronavirus continues to disrupt commerce around the world, the U.S. The Fed’s decision to raise rates was an inflection point after two years of trying to help the economy recover from the damage inflicted by the pandemic. Powell’s insistence that the economy was strong enough to withstand the bank’s efforts to slow inflation. In spite of the forecast for higher rates, stocks rose 2.2 percent on Wednesday, a possible signal that investors took heart in Mr. “The economy, we think, can handle interest rate increases,” he said.
Powell said that, in his view, “the probability of a recession within the next year is not particularly elevated,” and that “all signs are that this is a strong economy and, indeed, one that will be able to flourish” with less policy help. The central bank’s assault on rapid price increases will force it to strike a delicate balance as policymakers try to slow the economy just enough to temper demand and allow price pressures to moderate without going so far that they plunge the United States into recession. Powell, the Fed chair, said during his post-meeting news conference. “The economy no longer needs - or wants - this very highly accommodative stance,” Jerome H. Policymakers projected six more similarly sized moves over the course of 2022 as inflation has reached a 40-year high, signaling that they are prepared to pull back support for the economy markedly. economy, and this week’s decision was their first rate increase since 2018. The Federal Reserve lifted its key interest rate by a quarter of a percentage point on Wednesday as policymakers took their first decisive step toward trying to tame rapid inflation by raising borrowing costs.įed officials have kept interest rates near zero since March 2020, when the pandemic began to shake the U.S.
15, 2008, and thereafter it is the upper limit of the federal funds target rate range. 27, 1982, the federal funds target rate until Dec. Note: Rate is the federal funds rate until Sept.