NOVEMBER 30, 2018
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society
Amid the recent hubbub about rates continuing to rise for the foreseeable future, Fed chair Jerome Powell walked back his previous stance, suggesting a more moderate approach to future rate hikes. This came as welcome news to many, not least of all the stock market, which immediately soared.
This doesn’t mean instant relief, however, as multiple hikes are still expected in the coming year. Powell noted that interest rates are still low by historical standards and reminded critics of the twin risks the Fed tries to balance – hiking rates too fast could shorten the current economic expansion, but keeping them too low could cause inflation.
Beyond the interest rate environment, a new report from the Fed gave banks a nice little pat on the back, noting that they’re generally well-prepared for potential upheaval in the financial system.