WATCH LIVE: Fed chair Jerome Powell addresses Senate committee on unemployment and interest rates
PBS NewsHourJul 03, 2023
The Facts
On Wednesday, the US Federal Reserve (Fed) hiked interest rates a quarter point, putting the benchmark rate in the 5.25%-5.50% range. Chair Jerome Powell also suggested that more might be needed to lower inflation to the Fed's 2% target.
The midpoint of the benchmark rate now stands at its highest since 2001, with Powell saying that it was "certainly possible" another hike could come at the Fed's September meeting, saying there is a "long way to go" before inflation returns to the central bank's target.
The Spin
Pro-establishment narrative
The Fed needs to stay the course on its inflation reduction regime, as every dire prediction of a Fed-induced collapse from the rate hikes has failed to come true. The economic outlook in the country is stabilizing, which gives the Fed more latitude to raise rates and help curb rapid inflation. Powell and the Fed are taking reasonable, responsible steps to fight inflation and should ignore the political pressure to hold back.
Establishment-critical narrative
The Fed needs to hold off on any additional interest hikes for the time being, lest they risk prematurely ending the economic growth America has been experiencing. The data suggests that the economy's hot streak will cool off by the end of the year as pandemic-era savings and stimulus money is depleted by households, with reports suggesting personal savings have reached a record high. The Fed should let the succession of rate hikes take its course before making another hike.
