Fed softens stance on inflation control

Federal Reserve Chairman Jerome Powell on Wednesday announced another quarter-point hike of the Fed’s key interest rate, the latest in a streak of ten rate hikes meant to control inflation. But the Fed also softened its language regarding future interest rate hikes, saying in a statement that it would consider a range of factors before deciding whether it needed to raise interest rates again. In its last statement, it said that it anticipated raising interest rates again.

Why is the Fed possibly easing up on interest rate hikes? Wednesday’s rate hike comes after three major U.S. banks have collapsed in the last two months, in part due to holding long-term bonds that paid lower interest rates. It also comes as inflation remains persistently above the Fed’s target range. Meanwhile, the U.S. government is nearing its borrowing limit. Economists such as Mark Zandi of Moody’s Analytics have warned that if the United States collides with its $31.4 trillion debt ceiling, it could harm the economy.

Dig deeper: Read Jerry Bowyer’s column in WORLD Opinions about investors’ no-confidence vote in the U.S. economy in 2023.