It also raises the stakes for the White House and its Fed personnel decisions - not only whether to renominate or replace Chair Jerome Powell, but also whom to nominate for other open board seats. “‘It’s a no-win situation the Fed has been put in,’ said Douglas Holtz-Eakin, president of the American Action Forum and the former head of the Congressional Budget Office.” If the central bank waits too long, it would have to act more aggressively to raise borrowing costs down the road, which could also trigger a recession. “If the Fed moves too quickly to rein in consumer and business spending to cool inflation, it would be damaging to longer-term growth and job creation. Officials are essentially walking a tightrope into 2022, as our Victoria Guida lays out: Markets have grown increasingly convinced the Fed will take the next step almost as soon as it’s done tapering, likely in the middle of next year, amid worries over persistent price increases.
economy.īut that’s practically old news, right? The attention is now squarely on how long it might take officials to start raising interest rates.
IT’S TAPER TIME - Central bank officials have been hinting at it for weeks, and the day has nearly arrived: The Fed is expected to announce plans Wednesday to start dialing back its massive, pandemic-era support for the U.S. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m.
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