Popular Articles
Today Week Month Year


Fed Chair warns U.S. could see unexpectedly high interest rate hikes soon
By Cassie B. // Mar 09, 2023

The chairman of the Federal Reserve, Jerome Powell, warned this week that interest rates will likely be higher than policymakers at the central bank previously anticipated.

He cited data showing that inflation has now reversed the deceleration experienced late last year.

Powell stated: “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.

“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Their aim is to try to reduce inflation to a target of 2%; higher interest rates are expected to reduce consumer spending, which would slow the economy. However, the Fed has already raised interest rates at the quickest pace since the 1980s during the last year, climbing from almost 0 to over 4.5%. Despite this, consumer spending has not been slowing.

Higher rates are expected to negatively impact stocks and other investments and increase the risk of a recession down the line.

Following Powell’s announcement, stocks sank, with the S&P dropping 62 points and the Dow Jones Industrial Average closing 575 points lower. NASDAQ, meanwhile, dropped 1.3%.

When the Federal Open Market Committee meets again toward the end of the month, another increase is widely expected, and the hike could be in excess of 50 basis points. There remains considerable uncertainty about where rates will fall by year's end.

The impact of these moves on small businesses could be significant. Companies using loans with a flexible rate have seen the rates on their small business loans double in the span of just one year, while some businesses are paying more than 10% interest on their existing loans. This is hurting profitability and cash flow for the businesses that are already paying off loans and causing other businesses to delay their plans for expansion.

Human knowledge is under attack! Governments and powerful corporations are using censorship to wipe out humanity's knowledge base about nutrition, herbs, self-reliance, natural immunity, food production, preparedness and much more. We are preserving human knowledge using AI technology while building the infrastructure of human freedom. Speak freely without censorship at the new decentralized, blockchain-power Brighteon.io. Explore our free, downloadable generative AI tools at Brighteon.AI. Support our efforts to build the infrastructure of human freedom by shopping at HealthRangerStore.com, featuring lab-tested, certified organic, non-GMO foods and nutritional solutions.

Federal funds rate could hit 6%

Just how high could the rate move? Rick Rieder, a managing director and chief investment officer for asset manager BlackRock, told CNBC that he believes the federal funds rate could peak at 6 percent.

He commented: “We think there’s a reasonable chance that the Fed will have to bring the Fed Funds rate to 6%, and then keep it there for an extended period to slow the economy and get inflation down to near 2%.”

He said the economy has been more resilient than anticipated, as evidenced by the latest Consumer Price Index reading and jobs report. This resilience, he noted, is making things complicated for the Fed as the economy is not as sensitive to interest rates as it was in the past.

The last jobs report saw a rise of 517,000 nonfarm payrolls in January, which was well above market estimates. Unemployment, meanwhile, fell to 3.4%, which is its lowest level since 1969. The next report will be out tomorrow and is expected to continue pointing to a resilient labor market despite the recent aggressive rate increases.

This will be followed by updated consumer price data on Tuesday.

The results of these and other upcoming data releases will indicate whether last month’s hotter-than-expected figures were a fluke or a sign of things to come. Many experts believe we could see a rate rise of half a point, although Powell has insisted that a decision has not yet been made.

In congressional testimony this week, he said: “We’re not on a preset path. We will be guided by the incoming data and the evolving outlook.”

The next Fed meeting is scheduled for March 22.

Sources for this article include:

CNBC.com

CBSNews.com

CNBC.com



Take Action:
Support NewsTarget by linking to this article from your website.
Permalink to this article:
Copy
Embed article link:
Copy
Reprinting this article:
Non-commercial use is permitted with credit to NewsTarget.com (including a clickable link).
Please contact us for more information.
Free Email Alerts
Get independent news alerts on natural cures, food lab tests, cannabis medicine, science, robotics, drones, privacy and more.

NewsTarget.com © 2022 All Rights Reserved. All content posted on this site is commentary or opinion and is protected under Free Speech. NewsTarget.com is not responsible for content written by contributing authors. The information on this site is provided for educational and entertainment purposes only. It is not intended as a substitute for professional advice of any kind. NewsTarget.com assumes no responsibility for the use or misuse of this material. Your use of this website indicates your agreement to these terms and those published on this site. All trademarks, registered trademarks and servicemarks mentioned on this site are the property of their respective owners.

This site uses cookies
News Target uses cookies to improve your experience on our site. By using this site, you agree to our privacy policy.
Learn More
Close
Get 100% real, uncensored news delivered straight to your inbox
You can unsubscribe at any time. Your email privacy is completely protected.