If measures of the U.S. economy keep coming in hot, as they did in January, the Federal Reserve will likely have to raise interest rates even higher than it has already signaled
WASHINGTON — The Federal Reserve could increase the size of its interest rate hikes and raise borrowing costs to higher levels than previously projected if evidence continues to point to a robust economy and persistently high inflation, Chair Jerome Powell told a Senate panel Tuesday.
Most economists and Wall Street investors had expected the Fed to carry out another quarter-point increase at upcoming meetings. But traders and some analysts now see it as more likely that the Fed will implement a half-point hike later this month. “If you could speak directly to the 2 million people hardworking people who have decent jobs today who you’re planning to get fired over the next year, what would you say to them?” Warren asked.
“The more we help on the fiscal side, the fewer people you’re going to have to put out of work,” Sen. John Kennedy, Republican of Louisiana, said. Such economic figures, Powell said Tuesday, “have partly reversed the softening trends that we had seen in the data just a month ago.” Inflation, as measured year over year, has slowed from its peak in June of 9.1% to 6.4%. But its progress stalled in January: The Fed’s preferred measure of price increases rose from December to January by the most in seven months.
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