Jerome Powell Interest Rates
Jerome Powell is the current Chair of the Board of Governors of the Federal Reserve System, commonly known as “The Fed”. As head of The Fed, Chairman Powell leads the United States’ central bank and has wide-reaching influence over not only U.S. monetary policy, but global economic trends as well. One key factor that affects financial markets around the world is how interest rates are set by The Fed’s Open Market Committee (FOMC).
When an economy overheats or falls into recession, one tool available to The Fed is changing its target federal funds rate; this rate influences other interest rates such as mortgage loans, consumer credit cards and corporate borrowing costs. Under Jerome Powell’s watch since 2018, The FOMC has twice cut its target federal funds rate in response to slowing economic growth due to trade tensions with China and a global pandemic: once in July 2019 from 2.5% down to 2%, then again in March 2020 from 1.75% down to 0–0.25%.
In addition to cutting benchmark interest rates during times of economic distress, Chairman Powell also undertook several unconventional measures aimed at supporting businesses and households through difficult times–including increasing asset purchases for Treasury securities and agency mortgage-backed securities (MBS) –which ultimately help keep long-term borrowing costs low for consumers and businesses alike by putting downward pressure on longer term bond yields including mortgages .
These policies have helped provide much needed stimulus while limiting volatility in financial markets during turbulent times; however they can also lead to inflationary pressures if left unchecked over extended periods of time – something Chairman Powell must carefully consider when deciding whether or not future cuts are necessary or appropriate given current market conditions..
