Fed plays wait and see with monetary policy
Fed leaders see an economy too much in flux to say definitively how they’ll transition the country away from the past two financially piqued years.
Catch up quick: The Federal Reserve confirmed Wednesday expectations for an interest rate hike in March and that its massive bond-buying program would end by then.
- At the same time, chair Jerome Powell withheld exactly how aggressively the Fed might proceed for the rest of the year — how big the hikes would be and how many times it might raise rates.
Why it matters: Investors and lenders looking for details of the Fed's monetary tightening plan this year will have to wade through more uncertainty.
- Markets had traded up ahead of the announcement at 2pm and swung drastically into the red as Powell talked to reporters, before recovering some of the losses.
What he's saying: “It is not possible to predict with much confidence exactly what path for our policy rate is going to prove appropriate,” Powell told reporters.
Be smart: Inflation is a “particular economic scourge” for low-wage workers, Joseph Fuller, professor of management practice at Harvard Business School, tells Axios.
- Rising prices can lead to more people switching jobs to try to get higher wages, which in turn leads to labor supply issues for employers.
The bottom line: The pandemic is still not over and neither is the uncertainty that it has brought.