Federal Reserve Chairman Jerome Powell Wednesday will address the Fed's plans to raise interest rates until inflation falls, even if it possibly slows economic growth.
With inflation raging at a four-decade high, the job market strong and consumer spending still solid, the Fed is under pressure to raise interest rates aggressively.and might even have shrunk in the first half of the year. Such evidence would typically lead the Fed to stop raising rates — or even cut them., and this week it’s set to announce another hefty hike in its benchmark interest rate.
A news conference that Chair Jerome Powell will hold Wednesday — and whatever signals, if any, he sends about the Fed's next steps — will draw intense interest. Since the Fed met in June, the government has reported that inflation accelerated to a 9.1% annual rate, the most since 1981. Though two straight quarters of negative growth are sometimes seen as an informal definition of recession, few economists think the economy is in a downturn. Instead, recessions are defined by the National Bureau of Economic Research, a nonprofit group of economists.
"What we’re looking for is compelling evidence that inflationary pressures are abating and that inflation is moving back down," he said at a news conference after the Fed's June meeting. "We’d like to see that in the form of a series of declining monthly inflation readings." "I have not seen any convincing evidence that inflation has turned the corner," said Loretta Mester, president of the Federal Reserve Bank of Cleveland, earlier this month.
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