The market expects a quarter of a percentage point to be added to the benchmark rate, taking it above zero. This would be the first rate hike since the end of 2018.
But it comes at a tricky time.
Raising rates while ensuring the economy continues to grow is the latest challenge for Fed officials who have spent the past two years navigating between coronavirus shutdowns and the world’s worst labor market shock. ‘story.
Federal Reserve Chairman Jerome Powell has warned that the war could fuel inflation and cause households to cut spending. But he also said the dispute hasn’t changed the central bank’s thinking on interest rates.
“To ensure the economy continues to grow and avoid recession, I think it’s important to normalize interest rates,” Moody’s Analytics chief economist Mark Zandi told the court. House Financial Services Committee. Last week.
“The bottom line for low- and middle-income households is to avoid recession,” Zandi said.
Low-income households already struggling with high prices would be hit hard by a downturn.
The pandemic inflation trend started with products and services linked to high demand and supply chain disruption, such as cars. But higher prices quickly spread throughout the economy. In the year ended February, consumer prices in the United States rose 7.9% without seasonal adjustments, the Bureau of Labor Statistics reported last week. This is the largest increase since January 1982.