美国国家公共电台 NPR--Senate Banking Committee to question Fed Chair about interest rates, economy

Senate Banking Committee to question Fed Chair about interest rates, economy

Transcript

Federal Chairman Jerome Powell testifies before a Senate committee Tuesday morning. He'll likely be asked about the Fed's effort to curb inflation and how much higher interest rates are likely to go.

STEVE INSKEEP, HOST:

The Fed has already raised interest rates eight times in the last year, and they could do it some more.

A MART?NEZ, HOST:

Yeah, you see, raising interest rates is supposed to restrain the economy and bring inflation down. Prices are still climbing faster than most people would like. And Fed Chairman Jerome Powell is sure to be asked about that when he testifies before the Senate Banking Committee today.

INSKEEP: NPR's Scott Horsley covers the Fed. Hey there, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: How's the Fed doing?

HORSLEY: You know, their job's looking a little tougher now than it did about a month ago, the last time that Fed policymakers met. In the five weeks since that meeting, we've had a killer jobs report showing more than half a million jobs added in January. We've had retail numbers showing people are still spending at a rapid clip. And we've had inflation reports showing prices are not leveling off as much as had been hoped.

You know, ordinarily strong job growth and spending would be a sign of economic strength. But when you're wrestling with high inflation, it's not what the Fed wants to see. Here's how Mary Daly, who heads the San Francisco Federal Reserve Bank, summed it up over the weekend.

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MARY DALY: It's clear there is more work to do. In order to put this episode of high inflation behind us, further policy tightening maintained for a longer period will likely be necessary.

HORSLEY: And other Fed officials have been sounding similar alarms, suggesting that interest rates may have to go up higher and stay up longer in order to get prices under control.

INSKEEP: If in fact they do that, what would that mean for the broader economy?

HORSLEY: Well, it means more of a drag on the housing market. We're seeing mortgage rates climbing once again. It means carrying a balance on your credit card would cost more. So far, the Fed's efforts have not hurt the job market. Unemployment in January was the lowest in more than half a century. We're going to find out later this week what happened in February.

We're also going to get new inflation numbers next week. So by the time the Fed's rate-setting committee meets in a couple of weeks, they will have a better idea whether all that hot January data was just a fluke or maybe a sign of a longer-run trend. Right now, most investors are betting that the Fed is going to raise interest rates by another quarter percentage point at its next meeting. But the odds of a larger rate hike have gone up in the last month.

Back in December, the average Fed policymaker was predicting that interest rates would top out at just over 5%, or about half a point higher than they are right now. Given what we've seen and heard in the last few weeks, it's now possible that policymakers will have to nudge that peak interest rate a little bit higher.

INSKEEP: OK. So Jerome Powell testifies today. He's a guy that can use an adjective in the wrong way and it moves markets. So what else will you be listening for?

HORSLEY: Well, I'll be curious whether Powell gets any pushback from the senators over the Fed's aggressive interest rate hikes. So far, most lawmakers have been giving the central bank a lot of latitude. They and their constituents really want to see inflation come down, too. But we'll see if there's any change in that support this morning. As you know, Steve, Congress is under pressure to raise the federal debt ceiling or else sometime this summer, or maybe fall, the government won't be able to pay all of its own bills. House Republicans are demanding unspecified spending cuts in exchange for raising the debt limit.

Usually, Powell tries to steer clear of partisan battles like this, but he has said that lawmakers must raise the debt limit. And he's warned that if they don't, and if there's a government default, no one should expect the Fed to step in and limit the fallout.

INSKEEP: NPR's Scott Horsley - thanks for joining us so early once again. Appreciate it.

HORSLEY: You're welcome.