Powell Sends Mixed Messages as He Chickens Out On Rate Hikes

June 22, 2023

by Ryan McMaken Mises.org

The Federal Reserve’s Federal Open Market Committee (FOMC) on Wednesday left the target policy interest rate (the federal funds rate) unchanged at 5.25 percent. This “pause” in the target rate suggests the FOMC believes it has raised the target rate high enough to rein in price inflation which has run well above the Fed’s arbitrary two-percent inflation target since mid-2021.

Yet, at Wednesday’s press conference announcing the FOMC’s decision, Fed Chair Jerome Powell also claimed that “Inflation remains well above our longer-run 2 percent goal” and “inflation pressures continue to run high and the process of getting inflation back down to 2 percent has a long way to go.”

Moreover, according to Powell, the labor market is red hot, with Powell stating “The labor market remains very tight” and “labor demand still substantially exceeds the supply of available workers.”