Could allow banks and other financial outfits begin to DROP borrowing rates for consumers?
Federal Reserve Chair Jerome Powell is expected to pause his yearlong campaign of jacking up interest rates to curb inflation, offering a reprieve to consumers and businesses.
But for many Americans, the pain from the Fed’s efforts to squeeze borrowing costs may only be beginning…..
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While the resilient economy has offered President Joe Biden a key talking point for his reelection, the prospect that high rates will continue to weigh on indebted households and firms as the race heats up could undercut his message of optimism. It could also shake public confidence by triggering the demise of more banks or other vulnerable businesses as the year wears on.
“Keeping rates at these levels will pull more skeletons out of the closet,” said Laura Rosner-Warburton, a senior official at MacroPolicy Perspectives and a former staffer at the New York Fed….
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Part of it is that the central bank’s rate hikes can take more than a year to have a full impact on growth and inflation.
Still, the surprising strength of the economy has left Fed officials as uncertain about what’s ahead as everyone else. They now think borrowing costs are high enough to take a sizable bite out of economic growth, but they’re not confident enough to say no more rate hikes are coming. Though top policymakers have suggested they won’t raise rates at their June 13-14 meeting, they’ve left an increase on the table for the following one in July…..