Chair Jerome Powell on Tuesday underscored the Federal Reserve’s determination to keep raising interest rates until there is clear evidence inflation is steadily falling \u2014 a high-stakes effort that carries the risk of causing a recession.<\/b>
\nChair Jerome Powell on Tuesday underscored the Federal Reserve\u2019s determination to keep raising interest rates until there is clear evidence inflation is steadily falling \u2014 a high-stakes effort that carries the risk of causing a recession. The Fed\u2019s increases in its benchmark short-term rate typically lead, in turn, to higher borrowing costs for consumers and businesses, including for mortgages, auto loans and credit cards.
\u201cWhat we need to see is inflation coming down in a clear and convincing way,\u201d Powell said in remarks to a Wall Street Journal conference. \u201cAnd we\u2019re going to keep pushing until we see that.\u201d
\u201cWhat we need to see,\u201d Powell said, \u201cis clear and convincing evidence that inflation pressures are abating and inflation is coming down. And if we don\u2019t see that, then we\u2019ll have to consider moving more aggressively. If we do see that, then we can consider moving to a slower pace.\u201d
Retail sales rise 0.9% in April
U.S. retail sales rose 0.9% in April, a solid increase that underscores Americans\u2019 ability to keep ramping up spending even as inflation persists at nearly a 40-year high. The increase was driven by greater sales of cars, electronics and at restaurants, the Commerce Department said Tuesday. Even adjusting for inflation, which was 0.3% on a monthly basis in April, sales increased. Gas prices fell slightly last month, restraining inflation, after soaring in March in the aftermath of Russia\u2019s invasion of Ukraine.
\u201cNever bet against the U.S. consumer has always been a good adage,\u201d said Paul Ashworth, chief U.S. economist at Capital Economics, a consulting firm, in a note to clients. \u201cDespite the surge in prices weighing on their purchasing power, the U.S. consumer now appears to be single-handedly keeping the global economy afloat.\u201d<\/p>\n