At his press conference after Wednesday’s meeting, Fed Chairman Jerome Powell said further rate hikes of half a percentage point would be on the table for future meetings. But the bank is not looking to grow:
“A 75 basis point increase is not something the committee is actively considering,” Powell told reporters. “If inflation goes down, we’re not going to stop, we’re just going to go down to 25 basis point increases,” he added.
Americans are grappling with rising costs everywhere from groceries to the gas pump. Maintaining price stability is part of the Fed’s mandate, but so far inflation has continued to climb, leading some to wonder if the central bank is behind policy.
But Powell fired back at that point on Wednesday.
He also started Wednesday’s press conference by addressing the American people, saying that “inflation is far too high and we understand the difficulties it is causing. We are moving quickly to roll it back.”
“The implications for the US economy are highly uncertain,” the Fed statement said. “The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity.”
The bank also warned that pandemic-related lockdowns in China will likely strain already strained supply chains.
Together, these issues could put additional pressure on consumer prices over the coming months.
But monetary policy tools are not a silver bullet. Fed actions need time to take effect.
Starting in June, it will let $30 billion in Treasury securities and $17.5 billion in mortgage-backed securities flow each month between June and August, before increasing those amounts to $60 billion and $35 billion. dollars, respectively, in September.