Federal Reserve Chair Jerome Powell sought to strike a delicate balance at a moment when high inflation is bedeviling the nation’s economy and commanding a central role in the midterm elections
FILE - Federal Reserve Chair Jerome Powell speaks at a news conference Wednesday, Sept. 21, 2022, at the Federal Reserve Board Building, in Washington. The Federal Reserve may reach a turning point this week as it announces what's expected to be another substantial three-quarter-point hike in its key interest rate. The Fed's hikes have already led to much costlier borrowing rates, ranging from mortgages to auto and business loans.
The financial markets initially cheered the notion that the Fed might soon decide to slow its hikes, with stock and bond prices surging higher. The Fed chair pointedly emphasized that it would be “very premature” to even think about halting the rate hikes. Inflation pressures, he said, remain far too high.Stocks sharply reversed their gains and tumbled into the close of trading. The Dow Jones Industrial Average ended the day down over 500 points, or about 1.5%.
Powell implicitly addressed those fears at his news conference. He kept the door open to downshifting to a half-point hike when the Fed next meets in December. The central bank could then step down even further to a quarter-point increase — a more typically sized rate hike — early next year.
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