Last week, Federal Reserve Chair Jerome Powell delivered his semiannual testimony to Congress. A main feature of the discussion was the status of rate hikes and the fight against inflation.
In short, Powell’s inflation fight isn’t over.
Thus, a federal funds rate of 5.25% isn’t enough to contain rising prices. Ideally, a rate on the order of 7% to 7.25% is needed to do the trick.
After its recent FOMC meeting, the Fed signaled two additional rate hikes this year. As part of this week’s testimony, Powell validated this … remarking it was a “pretty good guess.”
So why pause in the first place?
This post appeared first on Money & Markets, LLC.