Fed May Raise Interest Rates for ‘Some Time’

Mortgages Rates – August 2022


Fed Chair Jerome Powell said Americans should expect more large interest-rate hikes in the coming months, one of the “unfortunate costs of reducing inflation.”


Federal Reserve Chair Jerome Powell delivered a stark message Friday: The Fed will likely impose more large interest rate hikes in coming months and is resolutely focused on taming the highest inflation in four decades.


Powell acknowledged that the Fed’s continued tightening of credit will cause pain for many households and businesses as its higher rates further slow the economy and potentially lead to job losses.


“These are the unfortunate costs of reducing inflation,” Powell said in the written version of a high-profile speech he is giving at the Fed’s annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.”


Powell’s message may disappoint investors who were hoping for a signal that the Fed might soon moderate its rate increases later this year if inflation were to show further signs of easing.


After hiking its key short term rate by three-quarters of a point at each of its past two meetings – part of the Fed’s fastest pace of rate increases since the early 1980s – Powell said the Fed might ease up on that pace “at some point” – suggesting that any such slowing isn’t near.


The Fed chair made clear that he expects rates to remain at levels that should slow the economy “for some time.”


Since March, the Fed has implemented its fastest pace of rate increases in decades to combat inflation, which has punished households with soaring costs for food, gas, rent and other necessities. The central bank has lifted its benchmark rate by 2 full percentage points in just four meetings, to a range of 2.25% to 2.5%. Those hikes have led to higher costs for mortgages, car loans and other consumer and business borrowing. Home sales have been plunging since the Fed first signaled it would raise borrowing costs.


News Source: Florida Realtors.org