Powell says interest rates may need to stay high amid little progress in inflation
US Federal Reserve Chairman Jerome Powell holds a press conference following the two-day Federal Open Market Committee meeting on interest rate policy in Washington on March 20, 2024.
Elizabeth Frantz | Reuters
Federal Reserve Chairman Jerome Powell said Tuesday that interest rates may need to stay high for longer as the battle to lower inflation continues.
Powell said during one of the sessions that little progress has been made in reducing price growth this year. For this reason, he said monetary policy may need to stay in place.
“The latest data shows strong growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to the 2% inflation target,” the Fed chairman said.
“It is clear that the latest data has not given us greater confidence, and instead indicates that it will likely take longer than expected to achieve that confidence,” he said. “However, we believe the policy is well placed to deal with the risks we face.”
-Alex Haring, Jeff Cox
Obama's national security adviser says the Iranian attack on Israel increases the risks in the Middle East in the long term
Tom Donilon, Obama's national security adviser, said Iran's weekend air attack on Israel raised risks in the Middle East in the long term.
Crude oil prices fell during the past two trading sessions, with fears of a broader war receding after Israel and its allies led by the United States succeeded in repelling the attack. But Donilon said the current cycle of conflict is far from over, with Israel likely to strike back.
Donilon, who is also head of the BlackRock Investment Institute, said Iran is now prepared to respond directly, in many cases from its own territory, to any attack by Israel on any Iranian interest or person.
“In the long term, it's a structural increase in the level of risk,” Donilon said. The former national security adviser said he is increasingly concerned about the risk of terrorist attacks in the West as the war between Israel and Hamas continues.
“The longer this goes on, the more concerned I become about the spillover effects with regard to terrorism here in the United States, especially in Europe,” Donilon said. He added that the number of potential threats and plots that have been thwarted, especially against Jewish institutions, is very high.
Donilon's comments were interrupted by protesters calling on Colombia to stop investing in fossil fuels.
-Spencer Kimball
Fed Chairman Jefferson sees inflation falling as policy remains on hold
Federal Reserve Governor Philip Jefferson said Tuesday that he expects inflation to continue to decline as the central bank continues its restrictive policy.
“My baseline expectations remain that inflation will fall further, with the interest rate remaining fixed at its current level, and that the labor market will remain strong, with labor supply and demand continuing to be rebalanced,” Jefferson said in a discussion of how that might happen. . Policy making has changed over the years.
He added: “Of course, the outlook is still not entirely certain, and if the incoming data suggests that inflation is more stable than I currently expect, it would be appropriate to maintain the current restrictive policy stance for a longer period.”
Markets are currently pricing the Fed to remain on hold until September, and then slowly begin cutting interest rates.
– Jeff Cox
