Interest Rates

The Fed Wants to Fight Inflation Without a Recession. Is It Too Late?

The Federal Reserve is poised to set out a path to rapidly withdraw support from the economy at its meeting on Wednesday — and while it hopes it can contain inflation without causing a recession, that is far from guaranteed. Whether the central bank can gently land the economy is likely to serve as a […]

The Fed Bets on a ‘Soft Landing,’ but Recession Risk Looms

Jerome H. Powell, the Federal Reserve chair, emphasized this week that the central bank he leads could succeed in its quest to tame rapid inflation without causing unemployment to rise or setting off a recession. But he also acknowledged that such a benign outcome is not certain. “The historical record provides some grounds for optimism,” […]

As Fed Prepars to Raise Rates, Global Economy Sinks Deeper Into Turmoil

Jason Furman, an economist at Harvard University, said many forecasters had been doing what investors sometimes refer to as “pricing to perfection”: assuming that everything is going to go well, even if that is not the most likely outcome. “You can look at the individual items: There’s been a lot of, what if inflation in […]

Inflation May Have Peaked. The Fed Needs to Step Gingerly.

In short, it might be helpful to reframe the C.P.I. news. Newspapers could quite accurately have run this much duller headline: Inflation Remained Stable, Well Below Its October Peak. Not a wage-price spiral. When inflation becomes deeply worrisome, it is typically because a “wage-price spiral” has set in, with workers responding to price increases with […]

Modern Monetary Theory Got a Pandemic Tryout. Inflation Is Now Testing It.

The problem is that the alternative to a Fed response is, at the moment, not obvious. The Biden administration’s attempts at tamping down price increases — longer port hours, release of strategic petroleum reserves, calling out corporate price gouging — have mostly tinkered around the edges of the issue. Those kinds of precise moves to […]

Fed Officials Make It Clear: This Time Is Different

Federal Reserve officials are preparing to pull back their economic help as inflation remains stubbornly high and the labor market swiftly heals, and they are signaling clearly that the last business cycle is a poor template for what comes next. During the economic expansion that stretched from the global financial crisis to the start of […]

Inflation and Deficits Don’t Dim the Appeal of U.S. Bonds

Looking Ahead, and to the Past What would have to happen for these rock-bottom borrowing costs to rise significantly? There could be a crisis of confidence in Fed policy, a geopolitical crisis or steep increases in the Fed’s key interest rates in an attempt to kill off inflation. In a more easily imagined situation, some […]

Fed Signals Rate Increase in March, Citing Inflation and Strong Job Market

Federal Reserve officials signaled on Wednesday that they were on track to raise interest rates in March, given that inflation has been running far above policymakers’ target and that labor market data suggests employees are in short supply. Central bankers left rates unchanged at near-zero — where they have been set since March 2020 — […]

Why Critics Fear the Fed’s Policy Shift May Prove Late and Abrupt

That caused the Fed to change course late last year — and to do so fairly abruptly. “Inflation really popped up in the late spring last year, and we had a view — it was very, very widely held in the forecasting community — that this would be temporary,” Mr. Powell said in December. But […]