Video - Fed Chairman Powell: "Pretty Full Docket" for Bank Regulation
Wednesday, 13 June 2018.
Following the Federal Reserve's decision to raise rates, Federal Reserve Chairman Jerome Powell says it will raise interest rates by another quarter-percentage point. Powell implies that rates could be lifted at a *slightly* faster pace this year in order to continue strengthening economy.
Powell discussed the following actions:
- Two More Interest Rate Increases Expected Before Year-End. Fed officials unanimously voted to raise its benchmark federal-funds rate by a quarter-percentage point (range: 1.75% - 2%). This is the 2d rate rise in 2018, & they intend to make a total of four increases before the New Year (projection is up from 3, which was set at a March meeting).
- Process for Raising Short-Term Rates Adjusted to Keep Rates Anchored. The Fed modified how short-term interest rates are raised to keep them from floating too high. The adjustment's purpose is to better anchor short-term rates, which are primarily surging due to the increased Treasury bill issuance.
- Fed Rate Increases Associated with Escalating Borrowing Costs. Borrowing costs have risen as the Fed tightens its monetary policy -- multiyear highs in recent months for interest rates on home, auto and credit-card loans.
Consquences of Powell's Statement Include:
- Fed Decision Leads to U.S. Stock Price Slip. Stocks slid Wednesday after the Fed announced it would raise interest rates a second time & intends on raising prices twice more before the end of 2018. Before the decision was announced, major indexes were fairly stable: however, indexes closed near session lows.
- Raised Rates Associated with Higher Dollar Price. The dollar fell after the Fed's Wednesday announcement that it would raise interest rates by another quarter-percentage points. Uncertainties over global trade & the Fed's hawkish approach caused the WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, to drop down 0.1%, to 87.15.
Watch a portion of Chairman Powell's statement Here.