US EditionFed’s Powell cautions about higher long-term rates as ‘supply shocks’ provide policy challenges
- Federal Reserve Chair Jerome Powell cautioned on May 15, 2025, in Washington, DC, that supply shocks might cause longer-term higher interest rates.
- Powell discussed the 2025 policy framework review prompted by changes since the 2020 adoption of average inflation targeting amid prior high inflation and rate hikes.
- He highlighted that supply shocks have increased volatility, complicating efforts to balance inflation control and employment support, and acknowledged the need for clearer communication.
- Powell indicated that the economy could face supply disruptions more often and for longer durations, posing significant difficulties for both economic stability and central bank policymaking, while reaffirming that maintaining a 2% inflation goal remains a key focus.
- The review is expected to lead to revised Fed policies and communication strategies reflecting current economic conditions, with likely sustained elevated interest rates and a flexible response to inflation and labor data.
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58 Articles
When Will The Fed Cut Interest Rates?
The latest data from the Bureau of Labor Statistics confirm that the Federal Reserve has made a lot of progress on inflation. The Consumer Price Index (CPI) grew 2.3 percent over the past year. It has grown at an annualized rate of just 1.6 percent over the past three months. Despite this progress, however, Fed officials voted to hold the federal funds rate target range at 4.25 to 4.5 percent last week. When will the Fed begin cutting interest …
Fox Business
The Business TimesPowell warns economy could face more frequent 'supply shocks'
Federal Reserve Chairman Jerome Powell on Thursday said that the central bank's framework for setting monetary policy may need to be adjusted to account for the possibility that supply shocks will become more common given the difficulties they pose for policymakers.Powell delivered remarks at the Federal Reserve's Thomas Laubach Research Conference and said that the central bank's policy rate – the target range for the benchmark federal funds ra…
US economy could face ‘more persistent supply shocks’: Powell
Federal Reserve Chair Jerome Powell said Thursday that the economy may be entering a period of more volatile inflation and more regular supply shocks relative to recent decades, in which inflation and unemployment remained low. Powell reflected Wednesday on “the possibility that inflation could be more volatile going forward than during the inter-crisis period of…
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