Powell Says Federal Reserve Will Maintain Record-High Interest Rates

Federal Reserve Chair Jerome Powell stated on Tuesday that the central bank plans to maintain interest rates at the highest level they have reached in over two decades, while waiting for evidence of a slowdown in inflation.

Chairman Jerome Powell also stated that while he expects inflation to decrease, he had less confidence than he had previously had in that outcome. Due to the lack of evidence showing a decrease in inflation, the Fed is unable to tell Americans when or if it may be able to lower interest rates.

“Were just going to have to see where the inflation data falls out.”

The Wall Street Journal

At the beginning of 2024, Federal Reserve officials were optimistic, hoping they would soon be able to lower record interest rates. However, as the year passed, optimism faded, leaving Americans stuck with the highest interest rates in more than two decades.

“We did not expect this to be a smooth road, but these were higher than I think anybody expected,” Powell said. He repeated his view that interest rates “by many, many measures” are high enough to slow demand, meaning “we’ll need to be patient and let restrictive policy do its work.”

The Wall Street Journal

Powell also stated that he does not believe the central bank will need to resume interest rate increases; however, that does not mean it is impossible.

Most officials have indicated that they don’t anticipate the central bank will need to resume interest rate increases, a view Powell repeated on Tuesday. Since last raising rates in July, officials have held their benchmark federal-funds rate steady in a range between 5.25% and 5.5%, the highest in two decades.

“I have said that I don’t think it’s likely based on the data that we have that the next move that we make would be a rate hike,” Powell said.

The Wall Street Journal

Heading into the 2024 election, President Joe Biden will be facing a storm of issues regarding his handling of various matters. One of the most prominent concerns troubling Americans nationwide is the state of the American economy and inflation.