The Federal Reserve will continue to raise interest rates at its next meeting, but how The Russian invasion of Ukraine It is unlikely to affect the U.S. economy, President Jerome Powell said Wednesday. Statements by the head of the central bank come as they face the United States rising inflationwith prices rising at its fastest pace in 40 years.
“I think it will be appropriate to raise our target range for the federal funds rate at the March meeting in a couple of weeks,” Powell said in a hearing Wednesday before the House Financial Services Committee on state of the economy. “And I’m inclined to propose and support a 25 basis point rate hike.”
Powell said he expects inflation to peak and start falling this year. While Powell currently supports a 25% interest rate hike, he said the central bank is willing to “move more aggressively” in future meetings, leaving the door open to 0.5% hikes, if inflation rises or is more persistent.
Looking ahead to the March 15-16 meeting, officials are weighing multiple factors in their next decision. Powell said the Fed will proceed with caution.
When Russia invaded Ukraine, the United States and its allies imposed historic sanctions on Russia and restricted trade with the country. Private companies are also cutting ties. He ruble price it plummeted by 30% and the Russian stock market lost 40% of its value. The price of crude oil touched his highest prices since 2014 plus $ 100 a barrel. But the full impact of these actions on US portfolios will take time to emerge.
“The price of oil depends on events that haven’t happened yet. It really depends on where it’s going. We’ve seen prices go up, even in the last two days. And they’ve risen quite a bit since then. Yes come back three months before this incident starts, prices are going up quite a bit, ”Powell said. “The effects will shift to gas prices, reduced economic activity and inflation: general inflation.”
Powell acknowledged that there may be unintended and unexpected effects of sanctions and other actions against Russia, but will not provide details. He noted that the US has no major interactions with the Russian economy, so any impact would be indirect.
How energy prices are rising, some Republican lawmakers have called on the Biden administration to increase its own energy production capacity. Powell declined to weigh in on the push to expand oil supplies, saying energy policy was a matter for the Biden administration and Congress.
said President Biden control prices is your top priority during your State of the Union address on Tuesday. Biden called for more products such as cars and semiconductors in the US and made the country less dependent on foreign supply chains.
“Economists call it ‘increasing the productive capacity of our economy,'” Biden said in his speech. “I call it building a better America.”
The president also called for cracking down on overpaid businesses and easing the pain of inflation by reducing other day-to-day costs for Americans, such as the cost of childcare and health care.
Although the Biden administration is pushing for these steps, White House economists have acknowledged that addressing supply constraints is not a short-term solution to rising inflation, and that inflation is the responsibility of the Fed.
Powell said the central bank has the tools and should use them to control inflation, but to the extent that they can get help on the supply side it would make it “much easier.”
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- Jerome Powell
- Ukraine
- gas prices
- Inflation
- Federal Reserve
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