[Economics] Why Higher Fed Rates Are Not Totally Off the Table

[-_-Moltres-_-]

 

Investors do not expect the Federal Reserve to raise interest rates again, and officials have made it clear that they see further increases as unlikely. But one important takeaway from recent Fed commentary is that unlikely and inconceivable are not the same thing. After the central bank held rates steady at 5.3 percent last week, the Fed’s chair, Jerome H. Powell, delivered a news conference where what he didn’t say mattered. Asked whether officials might raise interest rates again, he said he thought they probably would not — but he also avoided fully ruling out the possibility. And when asked, twice, whether he thought rates were high enough to bring inflation fully under control, he twice tiptoed around the question. “We believe it is restrictive, and we believe over time it will be sufficiently restrictive,” Mr. Powell said, but he tacked on a critical caveat: “That will be a question that the data will have to answer.”Investors do not expect the Federal Reserve to raise interest rates again, and officials have made it clear that they see further increases as unlikely. But one important takeaway from recent Fed commentary is that unlikely and inconceivable are not the same thing. After the central bank held rates steady at 5.3 percent last week, the Fed’s chair, Jerome H. Powell, delivered a news conference where what he didn’t say mattered. Asked whether officials might raise interest rates again, he said he thought they probably would not — but he also avoided fully ruling out the possibility. And when asked, twice, whether he thought rates were high enough to bring inflation fully under control, he twice tiptoed around the question. “We believe it is restrictive, and we believe over time it will be sufficiently restrictive,” Mr. Powell said, but he tacked on a critical caveat: “That will be a question that the data will have to answer.”

https://www.nytimes.com/2024/05/09/business/economy/federal-reserve-powell-raise-interest-rates.html