White House Says Biden Has ‘Confidence’ in Fed Chair Powell While Fedwatch Tool Predicts a 25bps Hike This Week – Economics Bitcoin News
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The White House has announced that President Joe Biden has full confidence in Federal Reserve Chair Jerome Powell as the Fed gears up to hold their policy meeting this week. Despite this show of confidence, the CME Group’s FedWatch Tool predicts that there will be a 25 basis points hike, signaling a potential tightening of monetary policy.
Recent reports indicate that the US economy has made significant strides in recent months, with unemployment levels dropping and consumer spending rising. However, inflation has also been on the rise, causing concern among policymakers.
Powell has been at the forefront of efforts to navigate these economic challenges, and the White House has stated that they believe he is well-equipped to continue guiding the US out of the pandemic-induced economic crisis.
In a recent press conference, White House Press Secretary Jen Psaki emphasized that Powell has the full backing of President Biden. “The President thinks [Powell] is qualified, he has confidence that he is an effective leader of the Fed…and he has been pleased with his management of the economy and the Fed’s work during this difficult time,” said Psaki.
Despite this vote of confidence, many economists are predicting that the Fed will raise its benchmark interest rates as soon as this week. The CME Group’s FedWatch Tool currently predicts that there is an 85% chance of a 25 basis point hike at the June meeting.
A potential hike in interest rates would signal a shift in monetary policy, which has thus far remained accommodative during the pandemic. It is seen as a way to address rising inflation while also encouraging savings and investment in the economy.
However, some experts warn that an increase in interest rates could also harm industries that have been heavily reliant on low interest rates, such as real estate and other credit-dependent sectors.
Regardless of what happens at the Fed’s policy meeting this week, it is clear that Powell and the Federal Reserve will continue to play a crucial role in shaping economic policy in the US. The question remains, however, whether the actions they take will have the intended effect of stabilizing the economy or could potentially lead to unintended consequences.
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