Climate protesters are interrupting Fed Chair Powell’s speech – for the second time in a month

Climate protesters are interrupting Fed Chair Powell’s speech – for the second time in a month

Washington, DC

Federal Reserve Chairman Jerome Powell said Thursday, in prepared remarks, that he is leaving the door open for additional interest rate increases to defeat inflation.

“We know that continued progress toward our 2% target is not guaranteed: inflation has given us some fudge,” Powell said before a conference hosted by the International Monetary Fund in Washington, D.C. “If it becomes appropriate to tighten the policy further, we will not hesitate to do so.”

If the Fed raises interest rates again, it will likely only happen once, and it could come during the US central bank’s next policy meeting in December. However, investors are optimistic about another pause in interest rate hikes next month, according to federal funds rate futures.

As Powell began to deliver his speech, he was interrupted by climate protesters who made their way onto the stage. This is the second time in the past month that the Fed chair has been interrupted during an appearance, after he was escorted off stage in October at the Economic Club in New York, clearly raising questions about security.

After returning to the podium, Powell explained that the Fed is carefully balancing the risk that inflation could return against the risk that the central bank will cause unnecessary economic damage.

“Unwinding pandemic-related supply and demand distortions plays an important role in lower inflation,” he said. But he added that demand is likely to slow until the central bank is sure that inflation is on track to fall to 2%.

Stocks fell broadly on Wednesday, with yields rising after Powell’s comments. The Dow Jones index fell 234 points, or 0.7%. The S&P 500 fell 0.8%, and the Nasdaq Composite lost 1%.

Powell wants to see weaker demand

The US economy expanded at a blistering 4.9% annual rate in the third quarter, thanks to strong consumer spending. The influx of American shoppers to attend high-profile concerts, movies and travel were hallmarks of the summer’s strong economic strength.

This is likely to be a headache for the Fed, since strong demand could keep some upward pressure on prices. The Fed’s mechanism for tackling inflation is to deliberately slow demand by raising interest rates.

“Going forward, it may be necessary for a greater share of progress in lowering inflation to come from tight monetary policy that constrains aggregate demand growth,” Powell said.

Interest rates are currently at their highest levels in 22 years, and the Federal Reserve has indicated that it is likely to keep interest rates high for longer. The central bank’s latest set of economic forecasts released in September reflects smaller interest rate cuts next year than previously estimated.

Powell and other Fed officials have noted that rising bond yields play an important role in cooling the economy because they translate into higher borrowing costs. Treasury yields rose in October, but began to fall after the Fed’s policy meeting earlier this month, partly due to the possibility of the Fed raising interest rates.

Meanwhile, other Fed officials indicated in their public speeches Thursday that the central bank may not need to raise interest rates further.

Kathleen O’Neill Pace, interim Kansas City Fed President, said during a speech in Jeffersonville, Indiana, that the steady slowdown in the labor market over the past year and the recent rise in Treasury yields were key reasons why she supported the Fed’s decision to hold the Fed. . Interest rates were flat earlier this month.

She said continued uncertainty about the economy could mean the Fed “can wait for more data before concluding that additional policy tightening is appropriate.”

Richmond Fed President Thomas Barkin hinted that the Fed may forego additional action because the economy may not have felt the full impact of the Fed’s previous 11 rate hikes so far.

“Overall, we are still not seeing the full effects of the policy,” Barkin said during a discussion in New Orleans.

CNN’s Crystal Hoare contributed to this report.

This story is evolving and will be updated.

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