Less than two weeks after the second-biggest bank failure in U.S. history, Federal Reserve Chair Jerome Powell made clear that inflation remains policymakers¡¯ top concern.
The Fed chief advised that more Fed tightening may be in store after Wednesday¡¯s interest-rate hike, and that the central bank will raise rates higher than expected if needed. In a news briefing, he also said officials don¡¯t expect to be cutting rates this year ¡ª even as the bond market showed traders doubling down on that outcome.
Officials are making a calculated risk that, while the recent banking turmoil will likely slow the economy, it won¡¯t mushroom into a broader financial meltdown. While their predecessors got a similar calculation wrong in 2007, regulators are counting on higher capital and liquidity standards, and a more muscular response, to ring-fence problems today.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.