Fed Chair Powell Rate Hikes
Fed Chair Jerome (Jay) Powell is the current chair of the Federal Reserve System, commonly referred to as “The Fed”. As part of his role, he has a direct influence on interest rate policy and can raise or lower rates depending on economic conditions. Recently, Chairman Powell has been raising overnight lending rates in an effort to fight inflation and maintain financial stability. This action is known as a “rate hike.”
Rate hikes are typically instituted when The Fed believes that there may be an increase in inflationary pressures due to increased consumer spending and other factors associated with robust economic growth. Rate hikes make borrowing more expensive for consumers which helps curb spending – limiting potential inflationary pressure from too much money chasing too few goods/services. They also help keep unemployment low by encouraging businesses to borrow at higher cost levels – forcing them into hiring additional workers rather than relying solely on automation or outsourcing labor costs overseas where wages are cheaper.
On December 19th 2018, Jay Powell announced a fourth quarter point rate hike bringing the federal funds rate up from 2-2 ¼ percent range it had previously held since September 2016 . This move was widely expected given recent strong job reports indicating healthy employment numbers coupled with rising wage increases across all income brackets; both signs signaling potentially increasing prices ahead if not addressed swiftly through monetary policy intervention such as this latest round of rate hikes by The Fed chairman himself..
While some economists view these moves positively believing they will yield long term benefits related to stable prices & controlled unemployment numbers others worry about their impact on short term investments like stocks & bonds being adversely affected due high borrowing costs now associated with investing capital over shorter timeframes– creating less attractive risk reward scenarios for investors who might otherwise have taken advantage of such opportunities before the latest rounds of tightening credit markets via these latest series’of fed chair Jerome(jay) powell led raised benchmarked interest rates….
