Fed's Powell: Rate hikes to slow, but adjustment just beginning

12/1/2022 10:30:00 AM

After imposing the fastest increases to interest rates since the 1980s, Federal Reserve Chair Jerome Powell said that the central bank may be ready to scale back the pace of rate hikes as soon as December

After imposing the fastest increases to interest rates since the 1980s, Federal Reserve Chair Jerome Powell said that the central bank may be ready to scale back the pace of rate hikes as soon as December

Federal Reserve Chair Jerome Powell said it was time to slow the pace of coming interest rate hikes while also signaling a protracted economic adjustment to a world where borrowing costs will remain high, inflation comes down slowly and the U.S. remains chronically short of workers.

Ann Saphir Nov 30 (Reuters) - Federal Reserve Chair Jerome Powell on Wednesday said it was time to slow the pace of coming interest rate hikes while also signaling a protracted economic adjustment to a world where borrowing costs will remain high, inflation comes down slowly and the United States remains chronically short of workers.Get Results with Omne If you need help with WJXT’s or WCWJ's FCC public inspection file, call (904) 393-9801.Wall Street closed out a solid November with a broad market rally Wednesday after the head of the Federal Reserve said the central bank could soon begin easing up on its aggressive interest rate increases aimed at taming inflation.WATCH LIVE Key Points Federal Reserve Chairman Jerome Powell confirmed Wednesday that smaller interest rate increases are likely ahead and could start in December.

In an hour-long session of prepared remarks and questions at the Brookings Institution think tank - his last scheduled appearance before the central bank's next meeting in two weeks - Powell gave a short-term message that sent markets soaring: The Fed was "slowing down" from the breakneck pace of three-quarter percentage point rate hikes that have prevailed since June, and would feel the way towards the peak interest rate needed to slow inflation to the Fed's 2% target.But he also outlined longer-term shifts that may be underway - in the supply of labor in particular - that could presage a long period of elevated interest rates and inflation that responds only slowly to the Fed's restrictive policy.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings.At the same time, he rejected the idea that the central bank was so intent on calming the highest inflation in 40 years that policymakers would "crash" the economy in that effort, insisting that a "soft or softish" landing remained possible, with inflation easing without a dramatic rise in unemployment.Federal Reserve Chair Jerome Powell, speaking at the Brookings Institution, reaffirmed that the central bank could begin moderating its pace of rate hikes as soon as December, when its policymaking committee is due to hold its next meeting."We wouldn't..Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, November 2, 2022.

." Stocks roared higher following Powell's mid-afternoon remarks.try to crash the economy and then clean up afterward," Powell said, with policymakers hoping not to "overtighten...The Dow Jones Industrial Average gained 2.because we think that cutting rates is not something we want to do soon.The chairman noted that policy moves such as interest rate increases and the reduction of the Fed's bond holdings generally take time to make their way through the system.

That's why we're slowing down and going to try to find our way to what that right level is" that lowers inflation over time.Combined the remarks showed the Fed grappling with some of the longer-term trends that were amplified by the pandemic, particularly the demographic drag that an aging population, COVID-era retirements, and weak immigration are having on the labor force.The major indexes ended November with their second straight month of gains, though they remain in the red for the year.Those won't reverse soon, Powell said, acknowledging that a tight labor market will have to be brought into balance mostly by Fed actions that lower the demand for workers - either through a drop in job vacancies or, as some fear, a rise in unemployment."I think for now we have to assume," that labor supply won't rebound, Powell said."We have to do what it takes to restore balance in the labor market to get back to 2% inflation.65% from 3.That pace of rate hikes is the most aggressive since the early 1980s.

..really just by slowing job growth rather than putting people out of work.34%." Those sorts of structural concerns have been in the background of Fed debate since the early days of the pandemic, but are moving to the fore.Concerns about global supply chains, for example, were considered fleeting at first, likely to pass and help fix high inflation as they did.History cautions strongly against prematurely loosening policy," he added.

But progress has been slower than expected, with China in particular now undergoing successive lockdowns that have made it a less secure source of goods, and U.53% shortly before Powell's speech.S.labor force participation still depressed.'LONG WAY TO GO' Federal Reserve Chair Jerome Powell holds a news conference in Washington, U."History cautions strongly against prematurely loosening policy," Powell said.S.However, Powell said short-term data can be deceptive and he needs to see more consistent evidence.

, November 2, 2022.REUTERS/Elizabeth Frantz/File Photo Powell's remarks about a coming downshift in the pace of rate increases ignited a robust rally in equity and bond markets, which have taken a pounding this year on the back of the Fed's aggressive rate hikes."The only thing we know is that a smaller rate hike is likely in December," Hooper said.The benchmark S&P 500 index (.SPX) shot into positive territory and closed 3.09% higher, and bond yields, which move in the opposite direction to their prices, all tumbled.Wall Street has been hoping that the Fed will slow the scale and pace of its interest rate hikes."By any standard, inflation remains much too high.

The yield on the 2-year Treasury note , the maturity most sensitive to Fed rate expectations, dropped to about 4.37% from 4.52%.The goal is to make borrowing more difficult and generally slow the economy in order to tame inflation.The dollar (.DXY) weakened against a basket of major trading partners' currencies.25% range, according to CME Group data.

In rate futures markets, traders added to the prevailing bets that the Fed would slow its pace of rate hikes at its meeting in two weeks.S."You can't keep raising rates as quickly as they were doing it," said Rick Meckler at Cherry Lane Investments in New Vernon, New Jersey."That said, investors always like the comfort of hearing it directly from the (Fed) chair." read more Still, and despite the coming slowdown in the pace of rate increases, Powell said it remained an open question "how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level."Cutting rates is not something we want to do soon," Powell said." While the Fed chief did not indicate his estimated "terminal rate," Powell said it is likely to be "somewhat higher" than the 4.That gap has closed to 1.

6% indicated by policymakers in their September projections.He said curing inflation "will require holding policy at a restrictive level for some time," a comment that leaned against market expectations the U.More than 95% of the stocks in the benchmark S&P 500 index notched gains Wednesday, with technology companies leading the gains.S.central bank could begin cutting rates next year as the economy slows.The central bank meets again on Dec.2%.Powell spoke at length about the factors keeping labor force participation low, a key factor in addressing the imbalance between open jobs and available workers.

13-14.Along with approving an expected half-point rate increase policymakers will issue new projections for rates, economic growth, inflation and unemployment in coming years.With the coming half-percentage-point increase the central bank will have lifted its overnight policy rate from near zero as of March to the 4.11.25%-4.50% range, the swiftest change in rates since former Fed Chair Paul Volcker was battling an even worse rise in prices.

That has not, however, had a convincing impact yet on inflation.The Dow climbed 737.Powell said Fed estimates of inflation in October showed its preferred measure still rising at about triple the central bank's 2% target.He noted that while goods inflation has been easing, the cost of housing is likely to continue to rise into next year, while key price measures for services remain high and the labor market tight.Data released earlier on Wednesday showed there were still about 1.22 points to 11,468.7 job openings for each unemployed person.

"Despite some promising developments, we have a long way to go in restoring price stability," Powell said."We will stay the course until the job is done.03 points, or 2." Reporting by Howard Schneider; Additional reporting by Caroline Valetkevitch; Editing by Paul Simao and Andrea Ricci Our Standards: Howard Schneider Thomson Reuters Covers the U.S.Federal Reserve, monetary policy and the economy, a graduate of the University of Maryland and Johns Hopkins University with previous experience as a foreign correspondent, economics reporter and on the local staff of the Washington Post.Markets in Asia and Europe closed mostly higher.

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LIVE: Federal Reserve Chair Jerome Powell set to speak on outlook for economyWATCH LIVE: Federal Reserve Chair Jerome Powell is scheduled to speak on the outlook for the economy and the changing labor market.

Federal Reserve chair signals slowdown in rate hikes, stocks rally on Wall StreetWall Street closed out a solid November with a broad market rally Wednesday after the head of the Federal Reserve said the central bank could soon begin easing up on its aggressive interest rate increases aimed at taming inflation.

Fed Chair Powell says smaller interest rate hikes could start in DecemberFederal Reserve Chairman Jerome Powell confirmed Wednesday that smaller interest rate increases are likely ahead. we need bigger rate hikes. 200bps Infaltion responds to ME-E by staying high. translation: a longer, odd-looking recession is much more likely than not.

Smaller rate hikes are likely coming in December, says Fed Chair Powell | CNN BusinessThe Federal Reserve could pull back on the pace of its aggressive rate hikes as soon as December, Fed Chairman Jerome Powell said Wednesday at an economic forum.

Fed Chair Powell Suggests 0.5 Percentage Point Hike For DecemberFed Chair Powell made clear in a recent speech that services inflation is what concerns him most, and that interest rates are approaching the level the Fed wants to see. That makes a 0.5 percentage point rate move for the Fed's December meeting most likely. As he should. It's hard right now.

Fed Chair Powell Suggests 0.5 Percentage Point Hike For DecemberFed Chair Powell made clear in a recent speech that services inflation is what concerns him most, and that interest rates are approaching the level the Fed wants to see. That makes a 0.5 percentage point rate move for the Fed's December meeting most likely. To bad the government doesn't stop spending money we dont have. That would slow inflation substantially!