Saudi Press

Saudi Arabia and the world
Friday, Dec 01, 2023

Powell signals Fed may take its foot off the gas on rate hikes following banking turmoil

Powell signals Fed may take its foot off the gas on rate hikes following banking turmoil

Federal Reserve chair says credit crunch could ease rate increases

Federal Reserve Chairman Jerome Powell said Friday the central bank may not need to hike interest rates as aggressively as it previously planned in its ongoing fight against inflation after the regional banking crisis made it more difficult to access credit.

Powell said during a panel discussion on monetary policy held by the Fed that "overall the banks and the banking system are strong and resilient," but acknowledged that the disruption to the financial sector from a series of bank runs in recent months could impact the central bank's policy decisions.

"Developments there, on the other hand, are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring and inflation," the Fed chair said. "So as a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals. Of course, the extent of that is highly uncertain."

Earlier this month, the Fed hiked rates for the 10th consecutive time, putting the key benchmark federal funds rate at a range of 5% to 5.25% – the highest in 16 years. But for the first time in a year, policymakers signaled that future rate increases are not a given, suggesting that additional policy moves will hinge on "incoming information."

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington, D.C., on March 22, 2023.


"A decision on a pause was not made today," Powell told reporters during a post-meeting press conference at the time, though he noted the "meaningful" change in the official statement.

"We're no longer saying that we 'anticipate,'" he said. "We'll be driven by incoming data, meeting to meeting. We'll approach that question at the June meeting."

Then, the Fed released a survey last week indicating that more banks are tightening their lending standards in the wake of recent turmoil within the financial sector, following the high-profile bank runs on Silicon Valley Bank and a handful of other regional lenders.

A worker (C) tells people that the Silicon Valley Bank (SVB) headquarters is closed on March 10, 2023 in Santa Clara, California.


Mid-sized banks are struggling, in part, from higher interest rates, as the Fed carries out its most aggressive tightening campaign since the 1980s.

Although inflation has eased from a peak of 9.1%, it remains about more than double the pre-pandemic average and well above the Fed's 2% target rate.

Powell reiterated Friday that the Fed is committed to returning to that goal, saying "failure to get inflation downward would not only prolong the pain, but also increase ultimately the social costs of getting back to price stability, causing even greater harm to families and businesses."

Newsletter

Related Articles

Saudi Press
Close
0:00
0:00
Henry Kissinger, the influential American diplomat, Nobel Peace Prize laureate, and former Secretary of State, passed away at 100 at his Connecticut home.
Here is a video showing the moment of the release of the captives by the terrorist organization Hamas and their transfer to the Red Cross on their way back to the State of Israel.
Here is a video showing the moment of the release of the captives by the terrorist organization Hamas and their transfer to the Red Cross on their way back to the State of Israel.
Bill Gates Envisions a Possible 3-Day Work Week with AI
Abu Dhabi-Backed Fund Poised to Assume Control of UK's Telegraph Media Group
Biden Advocates for Palestinian Authority to Govern Gaza and West Bank
Apple and Disney Halt Ads on X Following Elon Musk's Antisemitic Post, US Reacts
The UK’s Supreme Court, in a move that surprised no one who respects international law and human rights, has just delivered a landmark ruling against Prime Minister Rishi Sunak’s immigration strategy.
Top German journalist received €600,000 from Putin ally, leak reveals
A Dramatic Video from Gaza, Provided by IDF Spokesperson Daniel Hagari, Offers Undeniable Evidence of Hamas Establishing Terror Operation Bases Near Schools, Above Hospitals, and Inside Civilian Areas.
Moody's Downgrades U.S. Credit Outlook to Negative Amid Fiscal Concerns
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Swedish Embassy in Baghdad Engulfed in Flames Amidst a Firestorm of Protests
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Today, we're unveiling the splendor of one of Saudi Arabia's most exclusive and stunning retreats – the Jeddah Yacht Club
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
×