Fed Chair Powell could signal the likelihood of high rates for longer in closely watched speech
When Federal Reserve Chair Jerome Powell delivers a high-profile speech Friday in Jackson Hole, Wyoming, many analysts think he could make one thing clear: That the Fed plans to keep its benchmark interest rate at a peak level for longer than had been expected
JACKSON HOLE, Wyoming (AP) — When Federal Reserve Chair Jerome Powell delivers a high-profile speech Friday in Jackson Hole, Wyoming, many analysts think he could make one thing clear: That the Fed plans to keep its benchmark interest rate at a peak level for longer than had been expected.
The Fed chair's speech — at an annual conference of central bankers — comes at a time of heightened uncertainty about the economy and interest-rate policies. Businesses are still hiring, and consumer spending has remained resilient even while inflation has eased from a peak of 9.1% in June 2022 to 3.2%.
At the same time, “core” inflation, which excludes volatile food and energy prices, has remained elevated at 4.7% despite the Fed's streak of 11 rate hikes beginning in March 2022. And by raising its key rate from near zero to a 22-year high of 5.4%, the Fed has made borrowing much more expensive for consumers and businesses. Soaring mortgage rates, for example, have contributed to a 22% drop in home sales through the first seven months of 2023 compared with the same period last year, causing a potential headwind for the economy.
