Powell: Fed to raise interest rates ‘soon’ to fight persistent inflation

SIMONE DEL ROSARIO: IT’S DECISION DAY FOR THE FED IN ITS BATTLE TO FIGHT INFLATION.

FOR THE FIRST TIME SINCE THE START OF THE PANDEMIC, THE FEDERAL RESERVE SAYS IT’LL SOON BE READY TO RAISE ITS BENCHMARK INTEREST RATE, WHICH HAS BEEN SITTING NEAR ZERO FOR NEARLY TWO YEARS.

NOTABLY – IT’LL ALSO BE THE FIRST RATE INCREASE SINCE 2018. 

SINCE THE FED DOESN’T MEET IN FEBRUARY – INDICATORS POINT TO IT HAPPENING AS SOON AS MARCH.

FEDERAL RESERVE CHAIR JEROME POWELL: i think there’s quite a bit of room to raise interest rates without threatening labor market.

SIMONE DEL ROSARIO: THE DECISION COMES AS THE COUNTRY DEALS WITH THE HOTTEST INFLATION IN 40 YEARS, FUELED IN PART BY SUPPLY CHAIN STRUGGLES.

FEDERAL RESERVE CHAIR JEROME POWELL: there are multiple forces which should be working over course of year for inflation to come down we do realize the timing and pace of that are highly uncertain and that inflation has persisted longer than we thought and of course we’re prepared to use our tools to assure that higher inflation does not become entrenched.

SIMONE DEL ROSARIO: AFTER DRAMATIC MEASURES TO STABILIZE THE ECONOMY DURING THE PANDEMIC, THE FED SAYS IT’S ABOUT TIME TO DIAL IT ALL BACK WITH INFLATION SO HIGH AND UNEMPLOYMENT AT 3.9%.

THAT INCLUDES ENDING ASSET PURCHASES IN EARLY MARCH, ACCORDING TO THE FED. BUT IN A STEP BEYOND “TAPERING,” THE COMMITTEE ANNOUNCED IT COULD START SHRINKING ITS BALANCE SHEET SOMETIME AFTER RAISING INTEREST RATES – SAYING WHEN THAT HAPPENS – IT’LL BE IN A PREDICTABLE MANNER.

THE MARKETS BOUNCED AROUND, MOSTLY DOWN, THE ENTIRE TIME CHAIR JEROME POWELL SPOKE.

POWELL, FOR HIS PART, IS STILL WAITING FOR THE SENATE TO CONFIRM HIM FOR ANOTHER FOUR YEARS AS FED CHAIR. HE TESTIFIED EARLIER THIS MONTH AND HIS CURRENT TERM IS UP THE FIRST WEEK OF FEBRUARY.

I’M SIMONE DEL ROSARIO. FROM NEW YORK, IT’S JUST BUSINESS.