Jerome Powell is set to serve a second term as chairman of the Federal Reserve. Under Powell, consumers can expect the central bank to maintain its patient stance regarding inflation and interest rates.
Biden praised Powell and the Fed for decisive action that cushioned the impact of the Covid-19 pandemic. In March 2020, the Fed first cut interest rates to near zero and has held them at the said level ever since, along with instituting a monthly bond-buying program to boost the US economy.
Only after its most recent policy meeting did the central bank say it would begin to taper those emergency stimulus efforts as 88% of Americans are worried about inflation
With the Federal Reserve at an inflection point of starting to dial back stimulus, continuity at Fed chair is important. It is hard to change jockeys in the middle of the race.
The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that is not the rate that consumers pay, the Fed’s moves still affect the borrowing and saving rates they see every day.
Since the start of the pandemic, the Fed’s historically low borrowing rates have made it easier for most Americans to access cheaper loans and less desirable to hoard cash.
Only recent indications of rising inflation have caused the central bank to start to move away from its easy money policy. October’s consumer price index came in at a scorching 6.2% year-over-year, the biggest inflation surge in more than 30 years.
The first Fed rate hike is now expected as early as July, but only after the Fed has finishes tapering its bond-buying program.
Making this announcement on Monday morning before US markets opened is not accidentally and should alleviate any jitters from uncertainty about the Fed creeping in as markets and head into the Thanksgiving holiday.
Home / Market Update / Forex Market / Powell’s Reappointment, No Change of Jockeys in the Middle of Race
Tags biden bond purchase consumers FED inflation interest rate hike Jerome Powell jobs lending stimulus tapering
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