The Fed, as expected, raised interest rates yesterday, by a quarter of a point. It is the start of what will most likely be a monthslong, if not yearslong, campaign to tame the worst bout of inflation in decades without damaging the economic recovery that the central bank’s efforts during the pandemic helped foment.
A “soft landing” won’t be easy. To slow rapid price rises, Fed officials are preparing to raise rates six more times this year, and five times in 2023, according to their official projections (which, of course, could change). That would be three more in total than its previous cycle of rate increases, from 2015 to 2018, in roughly half the time. Nonetheless, the Fed chair, Jay Powell, stressed that the economy was strong enough to absorb higher rates, which could slow spending and investments by raising borrowing costs. “The probability of a recession within the next year is not particularly elevated,” Powell said.
This article was originally posted by Andrew Ross Sorkin, Jason Karaian, Stephen Gandel, Michael J. de la Merced and Ephrat Livni for The New York Times. PLease read the full article here.
