There have been 11 federal rate hikes since March 2022 (Fed Chair Jerome Powell)
Federal Reserve Chair Jerome Powell hinted at raising interest rates in the coming months as a strong labor market and a faster-growing economy make it harder to have inflation back to the Fed’s 2% target.
Speaking at the Economic Club of New York on Thursday, Powell said, “We certainly have a very resilient economy on our hands,” which beat many forecasts that said the economy will be in recession this year.
He also ruled out a rate hike in November. It would mainly have to do with the September inflation rate, which was 3.7%—a remarkable improvement from last year’s peak of 9.1% but far from the Fed’s target.
Powell’s main concern
There have been 11 federal rate hikes since March 2022, and the US economy is still not slowing down on spending.
Powell pointed out that businesses posted 336,000 new jobs last month, keeping the unemployment rate low at 3.8%.
More Americans are earning and are eager to spend. Retail sales were well above expectations in September. Those who didn’t splurge during the pandemic era are spending now. The rise in retail sales could also be due to the 37% surge in household wealth from 2019 to 2022, per the Fed data.
Recent geopolitical events, like the Russia-Ukraine war, sent energy and oil prices soaring, and now the Israel-Hamas conflict in the Middle East may also do the same.