The Fed will tolerate a recession and x other things we learned from Fed Chairman Jerome Powell's press conference on Wednesday.
The Federal Reserve on Wednesday voted to raise its benchmark interest rate by 0.75 percentage points, the third unusually large rate hike in a row.Here are six things we learned from the central bank’s economic projections and Fed Chairman Jerome Powell’s press conference on Wednesday:
Powell said that “no one knows whether this process will lead to a recession, or, if so, how significant that recession would be,” he said. He wouldn’t give his estimate of the odds of a recession.Powell was persuaded to front-load rate hikes There was a debate about whether the Fed should go slow and feel its way toward higher rates, or to go big right now, and Powell was persuaded by the front-load camp, said Julia Coronado, founder of MacroPolicy Perspectives.
Six Fed officials got very close. They forecast that the Fed will raise the benchmark rate to a range of 4.75%-5%. Asked for his impression, Powell said the recent deceleration in home prices from the “red-hot” market was a “good thing” because it brings prices more closely in line with rents and other fundamentals.
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