Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Powell Says Fed Will ‘Keep Pushing’ Until Inflation Comes Down

Economy May 17, 2022 02:27PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Powell Says Fed Will ‘Keep Pushing’ Until Inflation Comes Down

(Bloomberg) -- Federal Reserve Chair Jerome Powell said no one should doubt the US central bank’s resolve to curb the highest inflation in decades, including pushing rates into restrictive territory if needed.

“What we need to see is inflation coming down in a clear and convincing way and we’re going to keep pushing until we see that,” he said Tuesday during a Wall Street Journal live event. “If that involves moving past broadly understood levels of neutral we won’t hesitate at all to do that.” 

US central bankers raised interest rates by a half point at their meeting earlier this month and Powell said two similar moves were on the table in June and July. The target for their benchmark lending rate currently stands in a 0.75% to 1% range. He repeated that guidance on Tuesday, noting that “if the economy performs as we expect then that’s something that will be on the table.”

US consumer prices rose 8.3% in the 12 months through April, according to Labor Department figures published May 11. That was slightly lower than the 8.5% increase in the 12 months through March, which marked the highest inflation rate in 40 years.

Domestic demand remains strong even though financial conditions have tightened after a number of Fed officials have said they want to raise rates to neutral by year-end, which they see lying around 2.5%. 

“This is a strong economy and we think it’s well positioned to withstand less accommodative monetary policy, tighter monetary policy,” Powell said.

The Standard and Poor’s 500 stock index is down about 15% since its January peak, while yields on government 10-year notes stand around 2.96%, up from 1.5% at the start of the year.

Financial Conditions

The rise in longer-term yields is pushing up borrowing costs for housing -- one of the most interest-rate sensitive sectors of the economy that the Fed would like to see cool to help curb price pressures. The rate on a 30-year fixed-rate mortgage stood above 5.4% last week, up slightly more than 2 percentage points from the start of the year, according to the national average tracked by Bankrate.com.

Powell said that the reaction in financial markets showed that investors were getting the Fed’s message.

“We like to work through expectations and I’m not blessing any particular day’s readings but it’s been good to see financial markets reacting in advance based on the way we’re speaking about the economy.”

But the strong economy has been good for workers. Unemployment is low at 3.6%, and wages and benefits are rising. Fed officials say they can reduce demand for labor without raising unemployment, a feat that hasn’t been seen in the past two recessions.

(Updates with more Powell comments.)

©2022 Bloomberg L.P.

Powell Says Fed Will ‘Keep Pushing’ Until Inflation Comes Down
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Milan Shukla
Milan Shukla May 19, 2022 7:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
S&P will FART to 3200 by the time Sept rate hike kicks in and liquidity is sucked out with taper in 3 months
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email